Vattenfall set to decide on German energy grid

LONDON (Reuters) - Sweden's Vattenfall VATN.UL, owner of Germany's fourth-largest utility, will decide during the summer whether to sell, merge or keep its German energy grid, the company's chief executive said.

Vattenfall is weighing its options, after peers E.ON EONG.DE and RWE (RWEG.DE: Quote, Profile, Research, Stock Buzz) decided to sell parts of their grids following pressure from the Commission of the European Union and as grid profits decline due to state regulation, said Lars Josefsson, speaking at the Reuters Global Energy Summit in London.

"These are not our favorite assets. We are open to all options," Josefsson said. "We are close to a decision. It's likely during the summer."

The EU Commission, the EU's executive arm, is urging utilities in countries such as Germany and France to sell their energy grids, charging that utilities use the grid to maintain local monopolies and restrict access for competitors.

E.ON in February and RWE last week broke ranks with peers and decided to sell parts of their power and gas grids respectively to settle cartel cases with the European Union.

State-owned Vattenfall would also be open to E.ON's and RWE's proposal to form a pan-European or pan-German power-grid company, Josefsson said.

"I would talk to anybody who is interested," he said. "I would welcome integration."

The larger the connected grid areas are the better, he said.

""Ultimately we want to see one market in Europe. The solution is not the Netz AG (German grid company) but the integration in (larger) regions."

E.ON's long-distance, high-voltage grid, the part the company is selling, is some 10,000 kilometers long and has, according to German weekly magazine WirtschaftsWoche a value of more than 1 billion euros ($1.56 billion). RWE's is selling its long-distance gas grid with a length of some 4,200 kilometers.

Vattenfall aims to concentrate its investments in more profitable assets such as power plants in countries such as Britain and move away from regulated assets which offer only lower earnings potential, Josefsson said.

"Our area of interest is starting at the Alps and going north."

"We have an open mind and are looking at everything."

He said interesting countries included the U.K., Belgium, the Netherlands and Luxembourg, Poland and the Czech Republic.

All of the areas are of "equal interest," he said. "We have to accept when windows open and close."

Josefsson declined to comment on Vattenfall's interest in U.K. nuclear-power provider British Energy (BGY.L: Quote, Profile, Research, Stock Buzz), in which the British government is selling its 35 percent stake.  Continued...