German Energy Reversal

German Economy Minister Michael Glos told business daily Financial Times on Friday that he "would not rule out any option," including stripping energy producers of their distribution networks and the creation of a European energy regulator.

Glos said he favored a "step-by-step" implementation of the European Commission's proposals, which included splitting up the generation and distribution businesses of power companies.

"If you take the third step before the first, you will stumble," Glos said.

Glos initially opposed to EU plan

Glos' comments come days after the commission unveiled an ambitious energy policy aimed at cutting greenhouse emissions and liberalizing the bloc's energy sector.

At the time, Glos joined Germany's big energy firms in criticizing proposals to dilute the big energy companies' power. The minister said Germany would "not take any hasty steps" and first verify if the plan was compatible with the country's constitution.

Glos's comments to the Financial Times mark a sharp departure from his earlier stance.

"We must first make sure that the decisions made so far, for instance the obligation legally to unbundle distribution and production, are implemented everywhere," Glos said in the interview Friday. "That's a prerequisite."

The minister added that an independent operator could take over management of the distribution networks of integrated energy firms, according to the paper.

The companies should only be broken up if that failed to boost competition, he said. "If the independent operator model works, we will not need such a step."

"Not enough competition in German market"

Glos also said in Friday's interview that Europe should only establish an energy regulator if closer cooperation between existing national agencies failed to boost competition.

"We used to defend the line that national regulators are all we need, but we must admit this is not sufficient," Glos said. "We do not have enough competition in the German market.

"We need to now discuss with the other member states about how much national competence we want to concede to Europe," he added.

As head of the six-month rotating EU presidency, Germany has made fighting climate change a priority. Chancellor Angela Merkel has signaled that she wants to forge consensus among the 27-member EU on a common, long-term energy policy based on proposals from the EU Commission.

Germany is likely to deal with the issue of a common EU energy policy at a European summit in March.