European Union energy chiefs wrangled today over how to open their gas and power markets, with Germany and France resisting a push by liberalisers including Britain and Sweden for giant companies to be split up.
"We will not accept a forced sale," German economy minister Michael Glos told reporters. "This would not be positive for the security of supply."
The EU's executive European Commission proposed last year splitting ownership of gas and electricity supply from pipelines and grids in a drive to help new entrants and force down prices.
Germany and France spearheaded opposition to any forced break-up of national energy champions and proposed a "third way" allowing vertically integrated utilities to keep ownership of transmission networks under strict supervision by a regulator.
Their hand appeared to be weakened last week when a second German utility, RWE, agreed to sell a transmission network to settle a European Commission antitrust case.
RWE's decision to divest its domestic gas pipeline network followed a similar move in February by the world's biggest utility, E.ON, to sell its electricity grid.
But Berlin stuck to its guns in the EU negotiations. "We don't let them dictate decisions in backrooms in Brussels, where they threaten companies with fines for things we cannot comprehend to force companies to sell their networks," Mr Glos said. "The owners must decide themselves what to do with their networks," he added. "In Germany, we want to switch to renewable energy. For that, we need much investment into the networks."
Slovenia, which holds the rotating presidency of the EU, put forward a compromise paper on Tuesday to serve as a starting point for today's meeting in Luxembourg.
The Slovenian compromise would allow utilities to maintain ownership of gas and electricity supply and distribution businesses but under heavier regulation than in the original "third way."
Supporters of full ownership unbundling such as Britain and Sweden wanted a sunset clause ensuring that whichever version of the "third way" is adopted would be phased out after five years unless the EU explicitly decides not to do so, to be replaced by full unbundling.
But Paris and Berlin appear close to winning their fight to have at most a neutral clause allowing a review of the system after five years with no commitment to change it.
The Slovenian proposal calls for the Commission to reassess after five years whether the "third way" is working properly and propose changes "where appropriate."
Liberalisers also question proposals in the Slovenian compromise to deal with gas and electricity markets in the same way. Countries that favour full unbundling would prefer separate treatment, as they see less justification for compromise on power markets than on gas.
Their hand was strengthened yesterday when an influential committee in the European Parliament, which has powers of co-decision on energy liberalisation, threw out a version of the third way for gas markets.
Other amendments to the Commission's proposals include changes to the fining regime.