(BRUSSELS) - The European Commission on Wednesday put forward a new compromise proposal in its bid to require energy companies to split their generation businesses from their transmission networks.

In the face of strong opposition from eight EU nations -- including Germany and France -- the EU's executive arm has had to water down an original proposal, launched last year, to force energy giants to "unbundle" the two by selling off gas pipelines and electricity grids.

The "third way" option is added to earlier, opposed, versions of the plan -- the full sell-off of the downstream operation or renting it out.

The latest version would allow the energy companies to maintain ownership of the total operation, from production to local distribution, while ceding management and decision-making rights over to a network managing company.

Yet it would also appease the commission in its bid to increase competition in the sector and help bring down energy prices.

"In principle nobody has rejected this paper ... all see merit in it," said EU Slovenian presidency spokesman Dragan Barbutovski, calling the proposal "a solid basis for further negotiation."

Experts from the 27 member states will begin examining the proposal in detail on Thursday with a view to hammering out at least a common approach in time for the next meeting of EU energy ministers on June 6, he added.

Another diplomatic source cautioned that it was far from a done deal.

Eager to boost competition, the European Commission proposed last 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 those proposals sparked an uproar from some of Europe's biggest energy groups, eight EU countries led by France and Germany handed the commission a joint proposal to shake up the sector.

The latest compromise bid was presented to ambassadors of the 27 EU member states at a meeting in Brussels on Wednesday.

Some member states, notably Britain, Denmark and the Netherlands have voiced reluctance over such a supervisory scheme and favour full unbundling.

The new text, backed by both the European Commission and the Slovenian presidency, includes a five-year review procedure to assess whether the "third way" option is successful.

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