Feb 1999

Richard Mogg, Lanna Blue Bangkok

With over 2,500 utilities preparing themselves for the liberalisation of the energy markets across Europe, there is a great expectation that this will lead to a significant amount of consolidation over the next few years. Many small and medium size players are expected to merge or sell out to a bigger domestic or foreign player. Whilst many of the larger players have announced cost cutting programs, the smaller utilities, in particular the municipal owned sector, face an uncertain future. Simon Allen, Mats Edvinsson, Jorma Kurra & Ivar Sagemo PricewaterhouseCoopers

Competition is surely coming to electricity markets and established utilities must not only adapt themselves to change but also persuade regulators to slow down its pace while they do so. Can these large, complacent companies perform such a difficult balancing act? The need for restructuring is clear, but for managers this will require a keen sense of which advantages to protect and which to abandon Keith Leslie, David Kausman, and Gustav Bard McKinsey & Co.

The outcome of the German parliamentary elections on September 27 - with the replacement of Helmut Kohl’s government with an SPD/Green coalition led by Gerhard Schröder - has potentially far-reaching consequences for the German energy sector. The new government comes to power with a manifesto commitment to “the fastest possible exit from nuclear energy production in Germany”. How nuclear’s role in meeting German energy demand could be replaced is a key question for the viability of the policy, as well as for the European energy industry in general. Stewart Gray Wood Mackenzie

Either by design, or by pure coincidence, the European power market will have embraced two fundamental structural changes within the first two months of 1999. On 1 January, eleven of the 15 European member countries – with the UK the most notable exception – signed over their economic and monetary policy to the European Central Bank in the first phase of economic and monetary union (EMU). On 19 February, the European Directive on electricity competition comes into effect requiring all member countries to open up at least 23 per cent of their market to competition. Jeremy Wilcox InfaScan Consultants