Nine countries warn EU against energy unbundling

PARIS (Reuters) - Nine European countries, including Germany and France, appear on a letter sent to the European Commission warning against a proposal to break-up utilities, the French environment and energy ministry said on Tuesday.

Germany's economy ministry on Monday confirmed a report that France, Germany and a group of allies had signed the letter.

France detailed the list of countries: France, Germany, Austria, Bulgaria, Slovakia, Cyprus, Greece, Luxembourg and Latvia.

"Along with eight other states, France believes that the ownership unbundling between network grids and commercial activities has not been successful," the ministry said, adding that break up brings no guarantee of low prices or sufficient investment.

It said the proposal had to remain optional.

The Commission, the European Union's executive arm, has said a full separation of ownership of power generation and distribution networks is its preferred solution to boost competition for the benefit of consumers.

That would mean splitting up companies such as Germany's E.ON and France's state-controlled Electricite de France and Gaz de France in the face of likely fierce opposition from trade unions.

The letter, written by French Environment and Energy Minister Jean-Louis Borloo, was timed to sway Brussels in the final phase of drafting legislation to implement an ambitious energy and climate change strategy agreed by EU leaders in March.

The warning shot appeared to be a response to a June letter by free-marketers including Britain, the Netherlands, Denmark and Sweden, urging Brussels to stick to its guns and resist pressure to drop the idea of breaking up Europe's energy giants.