The senate on Tuesday evening voted against the government’s new electricity and gas legislation because it will force energy firms Eneco and Delta to divest their networks.

The plan regulates a wide range of energy related issues, such as the building of new wind farms, but senators said they do not agree with forcing companies to separate into two. They say the measure would have an impact on their ability to compete abroad.

In 2007, the Dutch government passed legislation which stopped energy companies both producing power and transporting it. The government argued that while generating power is a commercial activity, the distribution market should remain in public ownership.

Energy firms had until January 2011 to comply with the new rules. Nuon and Essent, both now in foreign hands, have done so. However, the other main players Eneco and Delta, both of which are owned by local and provincial councils, have refused to comply. They argue the Dutch law contravenes European regulations.

Economic affairs minister Henk Kamp said the refusal of the senate to approve the new legislation will delay the building of new wind farms by at least six months.