An electric storm is raging over the western Mediterranean. French power plays have become a charged issue in Italy and Spain. French state monopoly power company Electricite de France (EdF) caused a furore in Rome last week by grabbing 20.1 per cent of Italian industrial group Montedison.
Montedison has majority holdings in energy producers Edison and Sondel. Together, these two modern and thrusting companies, soon to be merged, have 6,000 megawatts of generation capacity - 12 per cent of Italy's active production capacity. Projects coming on stream will take that share to about 22 per cent within three years.
Italy's shocked response was to rush through a decree limiting voting rights of foreign companies buying into its generation industry to 2 per cent - unless Italian companies are allowed reciprocal access to the buyer's domestic energy markets.
It is a response learned from the Spanish Government, which has suspended the voting rights of the foreign companies that recently acquired its fourth-largest power company, Hidrocantabrico. One of those is Electricidade de Portugal (EdP), 30 per cent owned by the Portuguese Government. The other is Germany's third-largest producer, Energie Baden Wuerttemberg (EnBW), 34.5 per cent owned by the French monopoly EdF.
Spain is acting under a new 'EdF Law' intended to keep state-owned foreign groups from controlling its utilities. The thinking behind it is similar to Madrid's restrictions on shareholdings by foreign telecommuications companies in which governments still hold a 'golden share'. The golden-share law, used to scupper a deal between Spanish phone company Telefonica and Holland's KPN, has been challenged by the European Commission.
This is not what the European Union's single market is supposed to be about. The idea is to foster free movement of capital and investment between member nations, not to give governments the excuse for nationalistic grandstanding and protectionism.
