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Deregulating with no regulator: Is the German electricity transmission regime institutionally correct?

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  • Glachant, Jean-Michel
  • Dubois, Ute
  • Perez, Yannick

Abstract

From 1998 to 2005, the German transmission grid has been put under a self-regulated arrangement. It seems hard to believe that transmission lines can be opened to "third-party access" only with a "negotiated access regime" and no regulator supervision. It seems contradictory with the notion of "ex post contractual hazards" promoted by V. Goldberg and O. Williamson. If a weak institutional arrangement is implemented, one might assume that it has to be harmful to network and market access. If it is not to be inefficient, why and how could it work? When looking at rules and prices for accessing the transmission network and the corresponding wholesale markets in Germany, the "club" arrangement for transmission opening does not appear so harmful. Accordingly, we have to reconsider the ex ante and ex post institutional mechanism of such a "club" arrangement. Ex ante, we first reconsider skills and strengths of industrial consumers and German Business associations in defining and assessing rules of transmission access. We underline that incomplete vertical and horizontal integration of German electricity companies impeded extensive cartel collusion. Ex post, we first look at a strong Competition Authority backing. Then we discover that ex ante and ex post dimensions are much more mixed and reinforced in an open "cumulative pro-competition process" framed by the Competition Authority.

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  • Glachant, Jean-Michel & Dubois, Ute & Perez, Yannick, 2008. "Deregulating with no regulator: Is the German electricity transmission regime institutionally correct?," Energy Policy, Elsevier, vol. 36(5), pages 1600-1610, May.
  • Handle: RePEc:eee:enepol:v:36:y:2008:i:5:p:1600-1610
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    Cited by:

    1. Jean-Michel Glachant, 2012. "Regulating Networks in the New Economy," Review of Economics and Institutions, Università di Perugia, vol. 3(1).
    2. Mustafa Durakoglu, S., 2011. "Political institutions of electricity regulation: The case of Turkey," Energy Policy, Elsevier, vol. 39(9), pages 5578-5587, September.
    3. Lætitia Guérin-Schneider & Michel Nakhla, 2012. "Emergence of an innovative regulation mode in water utilities in France: between commission regulation and franchise bidding," European Journal of Law and Economics, Springer, vol. 33(1), pages 23-45, February.
    4. Dubois, Ute, 2009. "Adaptability of competitive electricity reforms a modular analysis," Energy Policy, Elsevier, vol. 37(4), pages 1213-1221, April.
    5. Nowak, Bartlomiej, 2010. "Equal access to the energy infrastructure as a precondition to promote competition in the energy market. The case of European Union," Energy Policy, Elsevier, vol. 38(7), pages 3691-3700, July.
    6. Jean-Michel Glachant & Yannick Perez, 2011. "The Liberalization of Electricity Markets," Chapters,in: International Handbook of Network Industries, chapter 10 Edward Elgar Publishing.
    7. Lumini?a Gabriela POPESCU, 2011. "Structural Dynamic Of The Public Sector And Multilevel Governance: Between Hierarchies, Market And Network Forms," REVISTA ADMINISTRATIE SI MANAGEMENT PUBLIC, Faculty of Administration and Public Management, Academy of Economic Studies, Bucharest, Romania, vol. 2011(17), pages 47-63, December.
    8. Brunekreeft, G. & Twelemann, S., 2005. "Regulation, Competition and Investment in the German Electricity Market: RegTP or REGTP," Cambridge Working Papers in Economics 0501, Faculty of Economics, University of Cambridge.
    9. Jean-Michel Glachant, 2014. "Governance in Network Industries: Lessons Learnt from New Institutional Economics," RSCAS Working Papers 2014/67, European University Institute.

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