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Euro grid operators plan pan-Europe border fee

OSLO, March 27 (Reuters) - European grid operators said on Monday they will propose a pan-European tariff on cross-border trading for electricity at two euros per megawatt hour but industry experts said they may have set the rate too high. The fee, which would apply to European member states plus Switzerland but excluding Britain, Scandinavian countries and Greece, is one of several measures to be proposed at a two-day European industry gathering in Florence later this week.

"The two euros per megawatt hour will be one of our proposals," Odd Haakon Hoelsaeter, the president of the European Association of Transmission System Operators (ETSO), told Reuters.

"The question of how to split up the income from the tariff to the different countries is also a key element in this proposal," he said, adding that "the proposal is a significant step forward but definitely not the final agreement."

ETSO, formed in the wake of the European Union electricity directive in February 1999, represents grid operators from the 15-member bloc plus Norway and Switzerland.

Transmission network operators and regulators agreed at a similar meeting held in Florence in November last year basic conditions for harmonisation of tariffs and congestion problems intended for adoption in June 2000.

The proposals were submitted to the EU for review.

The new proposal comes at the request of the EU Commission to clarify trading arrangements in order to clear the way for a fully liberalised power market in Europe.

ETSO's proposal of a single fee at two euros per megawatt hour for cross-border trading could be implemented for around one year as a starter before any modifications were made.

Traders in Germany said the fee appeared very expensive when compared to the fee between Germany and Switzerland, for example, of 1.25 marks or around 0.6 euros.

"At first glance we think it is pretty high," said Paul van Son, chairman for the European Federation of Energy Traders (EFET), a group representing around 40 energy companies in Europe. "But the discussion in Florence should take place first to give all the interested parties the opportunity to raise their opinions."

"It is a very good step in Europe," he said.

Paul Bulteel, secretary general of Brussels-based Eurelectric, representing the European electricity industry, said he was confident an agreement at the meeting would be reached although he declined to comment on the fee.

The power industry as well as the EU Commission have expressed interest in establishing auction systems to handle cases of scarce capacity of electricity across borders.

Hoelsaeter said it was not necessary to have a common auction system for each border facing bottlenecks.

"It is important that those directly involved find the best solution but the system has to be market oriented," he said.-Reuters