* CEOs say half electricity bills stem from "political"
* Want end to green subsidies, support for gas generation
* Call for stronger carbon market
* 'Magritte Group' formed in May to demand reform
By Geert De Clercq and Barbara Lewis
BRUSSELS, Oct 11 Bosses from 10 utilities
representing half of Europe's power-generating capacity urged
the European Union on Friday to adopt reforms to prevent
black-outs and help the indebted sector adapt to future demand.
The CEOs, who call themselves the Magritte Group after an
initial meeting in an art gallery, said EU energy and
environment policy was failing in its objectives and had raised
the risk of the lights going out.
Rising electricity bills that are damaging Europe's
international competitiveness were the fault of political
charges and misguided subsidies for solar and wind, rather than
the fault of the energy companies, they said.
"We cannot have a renewables society without security of
supply," said Peter Terium, chief executive of Germany's RWE
"The S.O.S. signal that we are sending today is about the
need to have a power market design that catches up with this
Without action, the CEOs said the sector would remain
unworthy of investment and reliable power would be a thing of
"The risk of black-outs has never been higher," GDF Suez CEO
Gerard Mestrallet said.
Europe's electricity bills, burdened by subsidies for
renewables, are around double those in the United States, where
shale gas has lowered costs, the CEOs noted.
"We have to make sure the energy price is not the vehicle
for translating other non-related political costs," E.ON
Chief Executive Johannes Teyssen said.
HOW MANY TARGETS?
EU policy stretches out to 2020 with a set of policy goals
to encourage sustainable, secure and affordable energy supply.
They include a target to increase the use of renewables to 20
percent, cut carbon emissions by 20 percent and increase energy
savings to 20 percent of projected levels.
Policymakers are expected to announce proposals for 2030
goals around year-end. They are expected to propose two goals,
one for greenhouse emissions and one for renewables, while the
CEOs want a single climate goal.
The Commission, the EU executive, is also revising
guidelines on support schemes, which could limit government
subsidies for green power.
Environmentalists say targets for renewables, energy savings
and the climate are all essential and have been proved to work.
Yet the utilities argue generous feed-in tariffs have
distorted the market, while they have been forced to mothball
gas-fired power plants because they cannot compete.
According to the Magritte Group, utilities have closed 51
gigawatts of modern gas-fired generation assets - the equivalent
of the combined capacity of Belgium, the Czech Republic and
Portugal - and the risk is more will be shut.
To help maintain the gas-fired capacity as vital back-up to
intermittent renewable power, the CEOs want a Europe-wide
mechanism to pay utilities for keeping capacity on stand-by.
At the same time, to help make gas more competitive against
more polluting coal, the CEOs want a quick fix to the EU
Emissions Trading Scheme, where carbon prices have plunged to
record low prices this year under a burden of surplus credits.
With carbon still below 5 euros per tonne, it is more
expensive to burn gas than coal.
The CEOs are competitors, but they decided to set aside
their differences in May at a meeting in the Brussels museum of
Belgian surrealist artist Rene Magritte.
The Magritte Group includes GDF Suez, E.ON and RWE, Spain's
Iberdrola and Gas Natural, Italy's Enel
and Eni, Sweden's Vattenfall, Czech
utility CEZ and GasTerra from the Netherlands.
Their lobbying of the European Commission and national
governments has had an impact, with Germany, France and Spain
saying they are rethinking green support schemes while the
Commission is reviewing EU-wide guidelines.
The guidelines could include a capacity mechanism, although
some in the Commission are known to have reservations about what
they consider a subsidy for fossil fuel.
EU energy policy and its costs will be debated by heads of
state and government at a summit early next year.
(Additional reporting by Francesco Guarascio and Tom
Koerkemeier; editing by David Cowell and Jason Neely)