Divorce comes at a price: An ex ante welfare analysis of ownership unbundling of the distribution and commercial companies in the Dutch energy sector
Vertical unbundling in the electricity sector is a hot political topic in the European Union. The European Commission has decided that the ownership unbundling of transmission networks from other stages in the value chain is the most effective way to ensure fair network access and infrastructure investment. While this European unbundling debate has not ended yet and most countries still do not have an independent transmission system operator (TSO), the Dutch government has already taken one step further. In 2008, it decided that distribution companies should be completely separated from commercial activities that are part of the same holding (generation, trade and supply). This governmental decision has been fiercely debated. Although the goal is to improve competition as well as security of supply, these benefits are uncertain. Nevertheless, it is certain that ownership unbundling comes at a cost. In this paper we present an ex ante cost-benefit analysis of the Dutch unbundling act. We conclude that it is unlikely that this act is welfare enhancing: divorce comes at a price.
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.
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.
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.:
- David M. Newbery, 2005.
"Electricity liberalization in Britain: The quest for a satisfactory wholesale market design,"
The Energy Journal,
International Association for Energy Economics, vol. 0(Special I), pages 43-70.
- Newbery, D., 2004. "Electricity Liberalisation in Britain: the quest for a satisfactory wholesale market design," Cambridge Working Papers in Economics 0469, Faculty of Economics, University of Cambridge.
- James B. Bushnell & Erin T. Mansur & Celeste Saravia, 2008. "Vertical Arrangements, Market Structure, and Competition: An Analysis of Restructured US Electricity Markets," American Economic Review, American Economic Association, vol. 98(1), pages 237-266, March.
- James B. Bushnell & Erin T. Mansur & Celeste Saravia, 2007. "Vertical Arrangements, Market Structure, and Competition An Analysis of Restructured U.S. Electricity Markets," NBER Working Papers 13507, National Bureau of Economic Research, Inc.
- Bushnell, James & Mansur, Erin T. & Saravia, Celeste, 2008. "Vertical Arrangements, Market Structure and Competition: An Analysis of Restructured U.S. Electricity Markets," Staff General Research Papers Archive 13130, Iowa State University, Department of Economics.
- Baarsma, Barbara & de Nooij, Michiel & Koster, Weero & van der Weijden, Cecilia, 2007. "Divide and rule. The economic and legal implications of the proposed ownership unbundling of distribution and supply companies in the Dutch electricity sector," Energy Policy, Elsevier, vol. 35(3), pages 1785-1794, March.
- Kunneke, Rolf & Fens, Theo, 2007. "Ownership unbundling in electricity distribution: The case of The Netherlands," Energy Policy, Elsevier, vol. 35(3), pages 1920-1930, March.
- Michael Pollitt & Stephen Davies* & Catherine Waddams Price* & Justus Haucap & Machiel Mulder** & Victoria Shestalova & Gijsbert Zwart, 2007. "Vertical Unbundling in the EU Electricity Sector," Intereconomics: Review of European Economic Policy, Springer;German National Library of Economics;Centre for European Policy Studies (CEPS), vol. 42(6), pages 292-310, November.
- Giovanni Fraquelli & Massimiliano Piacenza & Davide Vannoni, 2005. "Cost Savings From Generation and Distribution with an Application to Italian Electric Utilities," Journal of Regulatory Economics, Springer, vol. 28(3), pages 289-308, November.
- M. Mulder & V. Shestalova, 2006. "Costs and Benefits of Vertical Separation of the Energy Distribution Industry: The Dutch Case," Competition and Regulation in Network Industries, Intersentia, vol. 7(2), pages 197-231, June.
- Paul Nillesen & Michael Pollitt, 2011. "Ownership Unbundling in Electricity Distribution: Empirical Evidence from New Zealand," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 38(1), pages 61-93, January.
- Nillesen, P. & Pollitt, M.G., 2008. "Ownership unbundling in electricity distribution: empircal evidence from New Zealand," Cambridge Working Papers in Economics 0836, Faculty of Economics, University of Cambridge.
- Newbery, D.M. & Pollitt, M.G., 1996. "The Restructuring and Privatisation of the CEGB: Was It Worth It?," Cambridge Working Papers in Economics 9607, Faculty of Economics, University of Cambridge.
- de Nooij, Michiel & Koopmans, Carl & Bijvoet, Carlijn, 2007. "The value of supply security: The costs of power interruptions: Economic input for damage reduction and investment in networks," Energy Economics, Elsevier, vol. 29(2), pages 277-295, March. Full references (including those not matched with items on IDEAS)