Dutch Court Says Utility Unbundling Conflicts With European Union Laws

Legislation enacted by the Dutch government in 2006, splitting the country’s four largest energy companies into commercial and transmission operations, is in conflict with European law, a court in The Hague ruled today.

“The unbundling law impedes the free flow of capital,” the court said in an e-mailed statement today. The court in The Hague declared non-binding the provisions to the national Electricity and Gas Laws, Jurgen Roos, the court’s press officer, said by telephone.

Dutch utilities began separating commercial operations such as production, trading and sales from grid units in 2008 after parliament approved the law and had until Jan. 1, 2011, to complete the process. Shareholders of the two biggest utility companies, Essent NV and Nuon NV, have since sold their commercial operations to RWE AG of Germany and Sweden’s Vattenfall AB, respectively.

The government plans to appeal the decision, said Jan van Diepen, a spokesman for the Economic Affairs Ministry. The court ruling was in response to a lawsuit brought by Essent, Eneco Holding NV and Delta NV. Nuon wasn’t a party to the case.

“We will talk with the board and our shareholders to see what to do with the unbundling process,” Peter Couwenberg, a Middelburg, Netherlands-based spokesman of Delta, said in a phone interview today. “We may seek compensation from the State as this has been a very costly process.”

Studying Ruling

Essent is studying the ruling and declined to comment, Jeroen Brouwers, an Arnhem, Netherlands-based spokesman, said in an e-mailed statement. Eneco didn’t immediately return a phone call seeking comment.

EU lawmakers in April last year approved legislation forcing member nations to choose one of three options to ease access to the power and gas grids of such producers as Electricite de France SA and E.ON AG. The choices are to force the companies to sell or spin off the transmission business; require them to hand over management of the grid to an independent operator; or oblige them to make the unit more independent through internal actions.

To contact the reporter on this story: Fred Pals in Amsterdam at fpals@bloomberg.net

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