But sell a network is not possible legallyJ F

Energy news: on the occasion of a future law authorizing the privatization of gas of France, some would make it possible to not nationalized distributors (DNN). -Is this possible

Jean-François Auby: It is possible, but it requires that alter the laws of July 1983 and April 1946 (1). The first prohibits communities to reduce their participation in the local SEM below 50; the second reserve the network management of electric and gas distribution by way of concession to structures under public control - that is, according to the Council of State, EDF, France gas, local public institutions, the SEM and the SICAE.

E.n.: It is therefore possible, but would it be appropriate

J F.A.: In my view, Yes. If the DNN survive, they need additional financial resources, and this may be done by a redistribution of capital and the establishment of alliances with other alternative operators on the distribution and/or supply. But the Ministry of the Interior is quite hostile to the modification of the status of the SEM, so such a development in electric and gas matters could then extend to other areas.

E.n.: What would be the consequences if the SEM were more mandatory majority public

J F.A.: If the law said that public structures - or largely controlled - are not the only ones to be managers of distribution networks, this will mean that will be opened to competition concessions. Therefore, to consider the consequences of such an opening. The problem is mainly for electricity. If it opens to competition management of distribution networks, should know how we finance non-profitable concessions. Concessions, the urban environment is profitable, the rural areas is not. The concessions of power distribution from Paris, Bordeaux and Lille, you will have 50 candidates, but not on that of the communes of Lozère. Except to establish discriminatory delivery rates... Look at the opening to competition of the concessions, should therefore assess the consequences and if necessary take action to avoid what is not.

E.n.: Change the law is the only way to open up to competition the concessions

J F.A.: No, because if gas of France change of status, the legal construction of the Council of State that operators must remain public to be managers of distribution networks fall completely. Those who support this thesis would have all the chances to win before the administrative law judge. It is not the right way to make things but should address the problem of non-performing electrical concessions. For gas, the opening to competition is easier because it is not present throughout the territory and rates are not fully péréqués. The resistors are less onerous than for electricity.

E.n.: that said, European rules grow anyway to competition...

J F.A.: In its judgment Coname (2) on an Italian gas concession, the Court of Justice considered was there have put in competition. The law of concessions as it is applied in France for electric and gas distribution is clearly in contradiction with Community principles. These contradictions can be solved in a thousand ways: by a decision of the Court of Justice, by the decision of a French Court, by a French parliamentary initiative, by the Government...

E.n.: What will be tomorrow in the presence of local communities in electric and gas matters

J F.A.: They are still concessionary authorities and owners of the networks! So we can also ask to not sell networks. On this point, the communities were highly variable positions. The FNCCR (3) is fundamentally hostile, but some municipalities here or there do not see this as a bad idea...

E.n.: But sell a network is not possible legally!

J F.A.: Should indeed change the Act which provides that the networks are in the public domain. They are considered as a communal equipment equipped with a special assignment to a public service in question as non-transferable. But the State has now made in 2001 for gas transport networks, it was sold to the operators (see box below).

E.n.: Can we on the other hand imagine as a community, rather than opt out of the energy sector, is involved instead more confident to a service provider care to provide some price to individuals, to verify the security of supply, etc.

J F..: More than the communities themselves, are federations of elected officials who think. But this seems hardly compatible with the opening to competition. The French system of administered prices is already viewed with suspicion by the European Commission, which will not tolerate that insofar as it is temporary. Then, the device that you talk to be possible, should negotiate with Brussels, and the legal base.

E.n.: Leaving the Presidency of the CRE, Jean Syrota called "bad students (4)" DNN competition. These comments appear they justified

J F.A.: DNN look, and it is logical enough to protect their territory just because they do not actually have the possibility to leave. The Act of January 2003 allows them to certainly participate in commercial companies and thereby provide customers outside that territory. But in reality, they do, especially for reasons of means, business organization and culture. Moreover, to ensure the provision of non-eligible customers, the DNN benefit from transfer of EDF ineligible tariff rates. Some DNN might be tempted to use these rates to make offers to eligible consumers...

Director of Auby advice

(1) The Act of July 7, 1983 the democratization of public sector codified in the Code of the territorial communities of 7 April 2000, said the Act of 8 April 1946 on the nationalization of electricity and gas, it also, provides the largely public nature of the DNN (article 23).

2 Judgment Coname, Court of Justice of the European communities, July 21, 2005.

3 National Federation of concessionary and governed communities (FNCCR).

4 "(The DNN) have little visible but effective practices that deter alternative suppliers to settle.". These practices are not easy to detect. "The best solution is the filing of a complaint on the part of an alternative provider, but this is not necessarily profitable for the latter, the DNN, which represent only 5 of consumers, being scattered over the territory", Jean Syrota, the Chamber, March 22, 2006.

BOX .

The capital of the SEM

The General Code of territorial communities of April 7, 2000 - which takes the Act of 7 July 1983 on the democratization of the public sector - provides that "the deliberative assemblies of the Commons, departments, regions and their groupings may, to the effect of creating local mixed-economy corporations (...), acquire shares or receive as royalty, shares of contributions"issued by these companies. Participation are (inter alia) subordinate (to the following condition): "local and regional authorities and their groupings hold, or several, more than half of the capital of these companies and votes in the legislative organs" (article l. 1521-1).

BOX .

Sell networks

To date, local communities may not sell their networks, considered by the act as public goods. The State already sold public property by transferring transportation of natural gas, in 2001. In its annual report for 2002, the Directorate General of energy and raw materials (DGEMP) of the Ministry of industry had justified it on the grounds that "The France, with a system for the transportation of natural gas concessions granted by the State for gas operators, for an average of 30 years, was a figure of exception in Europe." (Which) constitute a handicap to European competitors, all owners of their assets. "The legal framework has been amended by the laws of finance amendment of 2001 (article 81) and 2002 (article 10). Transport networks were transferred to the operators by orders of decommissioning for their output in the public domain of the State - arrested on 11 July 2002, Southwest gas and network company Elf Aquitaine and 2 August 2002 for gas of France.