The biggest German power company, EON, plans to sell its high-voltage network in anticipation of new European Union rules, press reports said on Thursday.
Plans to split off distribution networks worth more than one billion euros (1.5 billion dollars) were "well advanced" and EON chief executive Wulf Bernotat had already informed German Chancellor Angela Merkel, the business daily Handelsblatt reported, quoting industry sources.
The Frankfurter Allgemeine Zeitung (FAZ) cited government sources who said Merkel was unhappy because her government opposed the EU Commission's plans to unbundle energy supply and production activities from network operations.
The commission seeks to foster greater competition in EU energy markets.
Eight EU countries, including Germany and France, have voiced staunch opposition to the plans, and proposed an alternative in late January.
But EON's project has found some support within Germany's large coalition government, in particular from aides to Environment Minister Sigmar Gabriel.
"It would resolve a conflict for the group and presents advantages from the competition point of view," a senior civil servant told the FAZ on condition of anonymity.
The only condition was that networks not be sold to a foreign group or financial investor, he added.
An EON spokesman declined to comment on the report.
According to Handelsblatt, three other major German power companies, RWE, EnBW and Vattenfall, were also in intensive talks on the sale of their distribution networks.
Brussels wants big energy groups to sell or rent networks that transport natural gas and electricity to stimulate competition and investment in the aim of reducing energy costs to European consumers.