Advanced Search
MyIDEAS: Login to save this article or follow this journal

Reconsidering the European regulation of merchant transmission investment in light of the third energy package: The role of dominant generators

Contents:

Author Info

  • de Hauteclocque, Adrien
  • Rious, Vincent
Registered author(s):

    Abstract

    The regulation of merchant transmission investment (MTI) has become an important issue in the EU electricity sector, subsequent to the granting of authorizations by European authorities to five merchant projects: BritNed, Estlink, the East West Cables, NorGer and recently a merchant line connecting Italy and Austria. The creation of a new Agency for the Cooperation of Energy Regulators (ACER) at the EU level, which has decision-making powers on MTI, therefore presents a unique opportunity to question and re-design the current European policy. This paper shows that the recent decisions concerning MTI may suffer a strong bias against dominant electricity generators while incumbent Transmission System Operators (TSOs) or new entrant TSOs are generally favored by national regulators and the European Commission (EC). This strategy is misguided as it fails to recognize both the new incentives of generators to develop MTI and the conflict of interest between the regulated and non-regulated activities of incumbent TSOs. Letting dominant generators undertake MTI is indeed generally beneficial as long as potential abuses of dominance are mitigated. To deter possible anti-competitive effects, we propose a new and feasible allocation of regulatory powers based on a clear demarcation between the market monitoring powers of ACER and the antitrust powers of the EC.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://www.sciencedirect.com/science/article/pii/S0301421511006094
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

    Bibliographic Info

    Article provided by Elsevier in its journal Energy Policy.

    Volume (Year): 39 (2011)
    Issue (Month): 11 ()
    Pages: 7068-7077

    as in new window
    Handle: RePEc:eee:enepol:v:39:y:2011:i:11:p:7068-7077

    Contact details of provider:
    Web page: http://www.elsevier.com/locate/enpol

    Related research

    Keywords: Merchant transmission investment; European Union; Third energy package;

    References

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
    as in new window
    1. Sauma, Enzo E. & Oren, Shmuel S., 2009. "Do generation firms in restructured electricity markets have incentives to support social-welfare-improving transmission investments?," Energy Economics, Elsevier, vol. 31(5), pages 676-689, September.
    2. Adrien de Hauteclocque & Jean-Michel Glachant, 2008. "Long-term Energy Supply Contracts in European Competition Policy: Fuzzy not Crazy," Working Papers 0816, Massachusetts Institute of Technology, Center for Energy and Environmental Policy Research.
    3. Gert Brunekreeft & David Newbery, 2006. "Should merchant transmission investment be subject to a must-offer provision?," Journal of Regulatory Economics, Springer, vol. 30(3), pages 233-260, November.
    4. Twomey, P. & Green, R. & Neuhoff, K. & Newbery, D., 2005. "A Review of the Monitoring of Market Power The Possible Roles of TSOs in Monitoring for Market Power Issues in Congested Transmission Systems," Cambridge Working Papers in Economics 0504, Faculty of Economics, University of Cambridge.
    5. Brunekreeft, G. & Neuhoff, K. & Newbery, D., 2004. "Electricity transmission: an overview of the current debate," Cambridge Working Papers in Economics 0463, Faculty of Economics, University of Cambridge.
    6. Hogan, William W, 1992. "Contract Networks for Electric Power Transmission," Journal of Regulatory Economics, Springer, vol. 4(3), pages 211-42, September.
    7. Brunekreeft, Gert, 2005. "Regulatory issues in merchant transmission investment," Utilities Policy, Elsevier, vol. 13(2), pages 175-186, June.
    8. Roques, Fabien A. & Newbery, David M. & Nuttall, William J., 2008. "Fuel mix diversification incentives in liberalized electricity markets: A Mean-Variance Portfolio theory approach," Energy Economics, Elsevier, vol. 30(4), pages 1831-1849, July.
    9. Bushnell, James B & Stoft, Steven E, 1996. "Electric Grid Investment under a Contract Network Regime," Journal of Regulatory Economics, Springer, vol. 10(1), pages 61-79, July.
    10. K. Talus & T. Wälde, 2006. "Electricity Interconnectors: A Serious Challenge for EC Competition Law," Competition and Regulation in Network Industries, Intersentia, vol. 7(3), pages 355-391, September.
    11. Roques Fabien A. & Newbery David M. & Nuttall William J., 2005. "Investment Incentives and Electricity Market Design: the British Experience," Review of Network Economics, De Gruyter, vol. 4(2), pages 1-36, June.
    12. Joshua S. Gans & Stephen P. King, 2004. "Access Holidays and the Timing of Infrastructure Investment," The Economic Record, The Economic Society of Australia, vol. 80(248), pages 89-100, 03.
    13. Watson, Jim, 2004. "Selection environments, flexibility and the success of the gas turbine," Research Policy, Elsevier, vol. 33(8), pages 1065-1080, October.
    14. Joshua Gans & Stephen King, 2003. "Access Holidays for Network Infrastructure Investment," Development Research Unit Working Paper Series archive-39, Monash University, Department of Economics.
    Full references (including those not matched with items on IDEAS)

    Citations

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:eee:enepol:v:39:y:2011:i:11:p:7068-7077. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.