Social partners concerned about energy issues

In Belgium, the social partners play a role in the regulation of the electricity and gas market, though this has been reduced since liberalisation began in 2001. In October 2004, the publication of an assessment of the liberalisation process gave the partners the opportunity to air their views on the matter. All are concerned that high energy prices might prompt Belgian industrial companies to relocate their activities to other countries.

In order to conform with EU regulations, the Belgian electricity market is gradually opening and will be fully liberalised over 2006-7 (BE0103343F). Traditionally, electricity prices were set by a control committee, which was dominated by the social partners and especially the Federation of Belgian Enterprises (Fédération des Entreprises de Belgique/Verbond van Belgische Ondernemingen, FEB/VBO) employers' organisation. The committee chose to set low prices for large-scale and heavy industry (steel, chemicals, textile etc), which provides many jobs. The electricity sector generated substantial profits. with relatively high prices for small consumers (households and small enterprises). Production was monopolised by Electrabel, part of the major holding company Generale (owned by the French-based Suez). Distribution was in the hands of semi-public enterprises known as intercommunales.

When liberalisation started in 2001, the control committee was replaced by the Electricity and Gas Regulatory Committee (Commission de Régulation de l’Electricité et du Gaz/Commissie voor de Regulering van de Elektriciteit en van het Gas, CREG) (BE0405301N). CREG performs a more advisory role in regulating the market, instead of controlling it like the previous committee. The State Secretary of Energy Affairs now has more autonomous decision-making powers and CREG’s administrative board plays a more important role. CREG also has a general council with a broader composition: besides the government, the sector's companies and the traditional social partners - the Confederation of Christian Trade Unions (Confédération des Syndicats Chrétiens/Algemeen Christelijk Vakverbond, CSC/ACV), the Belgian General Federation of Labour (Fédération Générale du Travail de Belgique/Algemeen Belgisch Vakverbond, FGTB/ABVV), the Federation of Liberal Trade Unions of Belgium (Centrale Générale des Syndicats Libéraux de Belgique/Algemene Centrale der Liberale Vakbonden van België, CGSLB/ACLVB), the Union of Independents (Unie van Zelfstandige Ondernemers, UNIZO), the Union of Small Firms and Traders (Union des Classes Moyennes, UCM) and FEB/VBO- the board has members from the large industrial consumers (represented by FEBELIEC) and environmental organisations.

Social partner views

An assessment of the Belgian electricity market, recently commissioned by CREG, was published by the London Economics consultancy in October 2004. It was an opportunity for the social partners and especially the trade unions to reaffirm their views on the liberalisation of the electricity market and prices in Belgium.

CSC/ACV and FGTB/ABVV, in a joint statement, claimed that the interim evaluation of the liberalisation process has to be negative. Liberalising the market has caused job losses and brought higher work pressure in the electricity sector, the unions state. Furthermore, they argue that liberalisation still does not work properly in practice: major industrial consumers still have no real choice in electricity supplies, while consumer prices have not dropped dramatically as foreseen. The dominant market position of the former monopoly, Electrabel, is blamed for this situation. This market position has even been strengthened by the involvement of its parent company, Suez, in several other activities in the Belgian electricity sector. The unions conclude that liberalisation without proper market competition has a disastrous effect. Therefore, the unions restate their argument that households pay too high a price for electricity in Belgium. They have also voiced fears about the effects that these high electricity prices and the lack of competition between suppliers has on the competitiveness of the energy-intensive industries in Belgium, which are already threatened by globalisation and relocation pressures.

As a consequence of these joint criticisms, the unions have urged the federal government to take action. Based on the study by London Economics, they call on the government to intervene and instruct Electrabel to split up its activities into different companies for production, transport, distribution and delivery. Especially in production, the range of available suppliers must be more diversified, according to the unions. The unions demand that the government should take the necessary steps to make the free electricity market work for the common good. The unions have also made a renewed plea for lower, more consumer-friendly, prices and nationally applicable service-quality standards.

Electrabel and FEB/VBO reacted with little enthusiasm to these demands based on the study commissioned by CREG. The FEBELIEC industrial employers’ organisation was more supportive .

FEB/VBO is focusing on another energy issue, this time connected with the Kyoto protocol to the 1992 United Nations Framework Convention on Climate Change (which sets out binding targets by which developed countries must reduce their emissions of greenhouse gases). Within Belgium's environmental policies aimed at attaining the norms agreed in Kyoto, a system of energy-efficiency has been set up, based on 'benchmarking' agreements. By participating in such an agreement, industries commit themselves to improving and/or maintaining the energy efficiency of their process installations to the best international standard by 2012. As compensation for industry’s efforts, the regional governments guarantee that they will not impose additional measures concerning energy efficiency or carbon dioxide - this particularly applies to levies and emission ceilings. At the beginning of 2004, the federal government decided to support this system of energy-efficient agreements with additional environmental tax subsidies or tax cuts. However, in order to maintain the stability of the state budget, the government recently decided to postpone these measures to 2005. FEB/VBO reacted firmly by stating that this decision has challenged the current system. It also warned the government that this decision will raise companies’ energy bills and, as a result, diminish their investment possibilities.

Commentary

At the start of the liberalisation of the electricity market in Belgium, the social partners lost some decision-making powers in regulating the market. For the trade unions, this has resulted in a more consumer-oriented political position, and the unions have fewer incentives to defend the market position of the dominant electricity company, Electrabel, which reacted to the liberalisation by reducing future employment and working conditions. However, it is remarkable that the unions, in their drive to defend consumers’ interests, now call for more market competition. Meanwhile, it has emerged that electricity prices will drop substantially in Belgium during 2005.

The unions share with the main employers’ organisations a fear that high energy prices will stimulate Belgian industrial companies to relocate their activities to other countries. That is why energy management issues are very important for both camps. Changes in the energy market or transformations of government policies are closely monitored. These vigilant watchdog reactions by the social partners seem justified. For example a textile plant, Santens based in Veurne, closed recently with the loss of 170 jobs. Company management commented that not only Belgian labour costs but also energy and environmental costs were getting too high to be competitive. (Guy Van Gyes, HIVA-KU Leuven)