(BRUSSELS) - EU nations failed on Thursday to overcome their divisions on how best to inject competition into the gas and power sector, the European Union's Slovenian presidency said.

"Member states have a different view on the internal energy market," Slovenian Economy Minister Andrej Vizjak told reporters after chairing a debate with EU energy ministers.

Eager to boost competition, the European Commission proposed in September that integrated power and gas companies should hive off their retail distribution networks or allow them to be run by an outside operator.

After the proposals sparked an uproar from some of Europe's biggest energy groups, a group of eight EU countries led by France and Germany gave the commission a joint proposal for a third way to shake up the sector.

Vizjak said that ministers from most states preferred the commission's plans although the group of eight's alternative was also not rejected outright and remained to be explored.

"I think that the commission's proposal -- and I can tell you from today's debate that this is the majority's opinion -- is the most effective method for providing for efficient unbundling (of energy generation and distribution)," he said.

"However, we must not and we cannot neglect the opinion of member states that have a reservation," he added. "As the presidency, we have to respect and take into account these viewpoints as well."

Under the eight countries' plan, energy groups would be allowed to own both the generating capacity and distribution networks but the management of the two sectors would be strictly separated.

The independence of distribution networks from their parent company would be ensured by strict rules and an external monitor would make sure that other companies would be allowed to use the network.

Despite the divisions over the substance of the package, EU Energy Commissioner Andris Pielbalgs said that there was broad agreement that a deal should be reached by June.

The ministers debate came as it emerged that German energy group EON was planning to sell its high-voltage electricity network in the face of anti-trust concerns from European Commission regulators.

Greeting the news as a "very welcome development," Pielbalgs said: "I hope very much that EON's announcement will encourage other companies to follow."

Transport, Telecommunications and Energy Council (TTE) - Energy

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