Power plays hit Dutch attemptat energy reform

London, UK - -- LONG-AWAITED power sector liberalisation in the Netherlands has been stalled in the wake of allegations that entrenched utility firms run by local authorities are dragging their feet.

On 14 April, the Rotterdam-based power and gas distributor, Eneco Holding, formally requested a postponement of gas liberalisation for six months and last Monday the Dutch ministry of economic affairs quietly agreed to the delay.

Eneco chairman Ronald Blom warned that"administrative chaos" would result from deregulation, scheduled to begin on1 January 2004 and initially covering 7m households. "More caution is necessary," Blom claimed, warning that the three largest energy providers (of which his is the second) were "racing against the clock to prepare for this partial deregulation of the market".

What looks more likely is feather-bedded companies having to be dragged kicking and screaming into the world of unregulated markets. "The Dutch have been disappointingly slow at utilities deregulation already," says Steve Roth, an industry analyst with Hart Energy Markets in London. "So it is not surprising that further delays are being sought." In theory, the Netherlands should have been one of the first countries to deregulate its energy supply and make its grid accessible to third party suppliers. "The Dutch were third to pass legislation, after the UK and the Scandinavian countries," says Euan Blauvelt, an industry analyst with ABS Energy Research in London.

Blauvelt rates the level of energy liberalisation in the Netherlands as among the lowest in Europe, better than France but far below that of the UK, Germany or the Scandinavian countries. "Unfortunately, the companies set up to compete for energy supply are all controlled by the municipalities they serve - Eneco is a good example, owning 28% of the Dutch market, but with most of its equity in the hands of Rotterdam, and other towns in its surroundings. Within its home market, Eneco is the only supplier of gas."