EU energy liberalisation deal in reach-diplomats

By Yves Clarisse

BRUSSELS, May 15 (Reuters) - A deal to open Europe's energy market to greater competition is within reach after Brussels made concessions to France and Germany, battling to avoid the breakup of their giant utilities, diplomats said on Thursday.

European Union energy ministers could adopt a compromise on June 6 provided experts can hammer out tricky details, diplomats familiar with the position of Paris and Berlin said.

"We're on the right track now," one diplomat said, speaking on condition of anonymity due to the sensitivity of the talks.

The European Commission proposed last year forcing vertically integrated utilities to spin off their electricity grids and gas pipelines -- known as "ownership unbundling" -- in a drive to spur competition, encourage new entrants and force down prices.

Berlin and Paris led eight countries that opposed the plan and suggested an alternative "third way" that would avoid a breakup of national champions such as E.ON EONG.DE, RWE RWE.DE, EDF (EDF.PA: Quote, Profile, Research) and Gaz de France GDF.PA.

A group of liberal-minded states, led by Britain and Sweden, is pressing for full ownership unbundling. An influential European Parliament committee backed that approach last week.

On paper, both groups of countries have enough votes to block the legislation, forcing the Commission to offer a compromise this week that would allow integrated energy firms to retain ownership of their networks under strict conditions.

"For the first time, the Commission has recognised that it is possible to open the sector to competition and boost investment without dismantling vertically integrated firms," a diplomat in the Franco-German camp said.