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The EU's Dark Age

Written by Brian Hicks
Posted November 7, 2006

Though the European Union has attempted to address topics of trade and economic sustainability as a solid front, a half-hour blackout this weekend laid bare the day-to-day frailties of the continental body and its components.

Not only must countries interact and compromise within the EU, but companies and countries have to balance each other's interests as well.

Quite frequently, during recent years of intensified economic integration, corporate mergers in the energy sector have become entangled in the knots of economic nationalism.

Saturday night, millions of Europeans saw the light in the darkness.

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Cruisin' for a Bruisin'

Most residents of temperate climate zones are used to the occasional "October surprise," when leaf-laden trees catch an early snow, then tip over onto power lines and cause a few candlelit nights before utility crews get things back in order.

But this weekend's debacle was not touched off by Mother Nature-it was a brand-new Norwegian cruise ship called the Pearl being tugged out to sea that led German utility E.On to shut down a 380,000-volt line in northwestern Germany.

When E.On let the Pearl pass, it let the power fail. This spurred a ripple effect, forcing E.On's French counterpart RTE to scold the Germans for the "brutal imbalance."

RTE is rightfully revolted by having to reshuffle its volts. Five million people in France lost power for half an hour, including dozens who were stranded in elevators.

In an official statement, RTE added that an immediate correction is needed in order to avoid "a complete meltdown of the European electric system."

Germany's international broadcaster Deutsche Welle conveyed the weekend's events with the sense that an ominous corner had already been turned, referring to the EU's investigation into the affair as an "autopsy on [Europe's] energy sector."

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Lo, Lazarus of Brussels

Europe's jointly orchestrated energy infrastructure has appeared to be on its deathbed before. Last January, when Russia's price dispute with Ukraine and subsequent pressure drop on westward natural gas lines jeopardized heating during the coldest time of year, the EU demanded that Russia commit itself to regional standards through the European Energy Charter.

Russia balked, and instead of being punished with decreased demand, the national resource titan Gazprom is lining up more and more deals on the European horizon.

Then, this past summer, a larger-than-ever number of roaring European air conditioning units put a California-style bend in the power lines. Rolling blackouts hit Europe's three primary power zones, tolling the warning bell again for an event like Saturday's.

Unfortunately, nationalist energy hawks in countries like Spain and France have chosen to clench their fists rather than join hands in order to address the continent's energy problems.

The Madrid government has continually blocked a hardy takeover bid by none other than this week's goat E.On, incurring the impotent ire of the EU commercial leadership.

Despite EU headquarters in Brussels and its blustery energy czar Andris Piebalgs issuing repeated calls for deregulated power markets, individual governments on a country level have been able to hold fast and not surrender sovereignty over energy grids, even when market conditions favor such developments.

Piebalgs, the Latvian who serves as EU energy commissioner, called this weekend yet another case in point of the need for a "proper European energy policy." That policy is not fulfilled by the European Energy Charter alone. It must be delivered through Europe's transmission operators as a tidal wave of cross-border mergers becomes more and more likely to push through the levee of national obstacles.

If the money is there to finance across frontiers, then the investment capital is also present to improve existing transmission and backup systems. E.On said this week that its intended upgrades have been delayed by drawn-out bureaucratic approval procedures, and a German energy consumers' group says that 150% more was invested in the German supply network during the 1990s than is now, despite ever-increasing demand.

This approach cannot keep the lights on for long.

If individual EU countries do not jointly wake up to the reality of impending energy catastrophe, they will soon find themselves all together anyway, groping in the dark for answers.

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