Reconsidering the Regulation of Merchant Transmission Investment in the Light of the Third Energy Package: The Role of Dominant Generators
Following the grant of exemptions from the EC rules on third party access to the interconnectors BritNed, Estlink and East West Cables, the regulation of merchant transmission investment has become an important issue in the electricity sector. The creation of a new Agency for the Cooperation of Energy Regulators (ACER), which will enjoy decision powers on this issue, is therefore a unique occasion to question and maybe re-design the current strategy. This paper shows that the recent decisions evidence a strong bias against dominant generators and that incumbent or new entrant TSOs are generally favoured by European regulators and the European Commission. It argues that this strategy is misguided as it fails to recognize both the conflict of interest between the regulated and non-regulated activities of incumbent TSOs and the new incentives of generators. The opportunity to let dominant generators undertake merchant investment is then investigated and we find that it is generally welfare-improving as long as potential abuses of dominance can be mitigated. To deter possible anti-competitive effects, the paper proposes a new and feasible allocation of regulatory powers based on a clear demarcation between the monitoring of transparency requirements by ACER and antitrust enforcement by the European Commission.
|Date of creation:||04 Nov 2009|
|Contact details of provider:|| Postal: Convento, Via delle Fontanelle, 19, 50014 San Domenico di Fiesole (FI) Italy|
Web page: http://www.eui.eu/RSCAS/
More information through EDIRC
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.:
- Hauteclocque, Adrien de & Glachant, Jean-Michel, 2009.
"Long-term energy supply contracts in European competition policy: Fuzzy not crazy,"
Elsevier, vol. 37(12), pages 5399-5407, December.
- 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.
- Jean-Michel Glachant & Adrien de Hauteclocque, 2009. "Long-term Energy Supply Contracts in European Competition Policy: Fuzzy not Crazy," RSCAS Working Papers 2009/06, European University Institute.
- Jean-Michel Glachant & Adrien de Hauteclocque, 2009. "Long-term Energy Supply Contracts in European Competition Policy: Fuzzy not Crazy," EUI-RSCAS Working Papers 6, European University Institute (EUI), Robert Schuman Centre of Advanced Studies (RSCAS).
- Claude HENRY, 1996. "Concurrence et services publics dans l'Union Europeenne," Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) 9608, Université de Lausanne, Faculté des HEC, DEEP.
- 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.
- Joshua Gans & Stephen King, 2003. "Access Holidays for Network Infrastructure Investment," Agenda - A Journal of Policy Analysis and Reform, Australian National University, College of Business and Economics, School of Economics, vol. 10(2), pages 163-178.
- Joshua Gans & Stephen King, 2003. "Access Holidays for Network Infrastructure Investment," Monash Economics Working Papers archive-39, Monash University, Department of Economics.
- 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.
- Brunekreeft, G. & Newbery, D., 2005. "Should Merchant Transmission Investment be Subject to a Must-offer Provision?," Cambridge Working Papers in Economics 0534, Faculty of Economics, University of Cambridge.
- Brunekreeft, Gert, 2005. "Regulatory issues in merchant transmission investment," Utilities Policy, Elsevier, vol. 13(2), pages 175-186, June.
- Brunekreeft, Gert & Neuhoff, Karsten & Newbery, David, 2005. "Electricity transmission: An overview of the current debate," Utilities Policy, Elsevier, vol. 13(2), pages 73-93, June.
- 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.
- 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.
- Jean-Michel Glachant & François Lévêque, 2005. "Electricity Internal Market in the European Union - What to do next?," Working Papers 0515, Massachusetts Institute of Technology, Center for Energy and Environmental Policy Research.
- 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.
- François Lévêque & Jean-Michel Glachant & Marcelo Saguan & Gildas de Muizon, 2009. "How to rationalize the debate about 'EU Energy Third Package'? Revisiting criteria to compare electricity transmission organizations," RSCAS Working Papers 2009/15, European University Institute.
- Brunekreeft, Gert, 2004. "Market-based investment in electricity transmission networks: controllable flow," Utilities Policy, Elsevier, vol. 12(4), pages 269-281, December.
- Olmos Camacho, Luis & Perez-Arriaga, Ignacio J., 2007. "Comparison of several inter-TSO compensation methods in the context of the internal electricity market of the European Union," Energy Policy, Elsevier, vol. 35(4), pages 2379-2389, April.
- D. Finon & F. Roques, 2008. "Financing Arrangements and Industrial Organisation for New Nuclear Build in Electricity Markets," Competition and Regulation in Network Industries, Intersentia, vol. 9(3), pages 247-282, September.
- Finon, D. & Roques, F., 2008. "Financing arrangements and industrial organisation for new nuclear build in electricity markets," Cambridge Working Papers in Economics 0850, Faculty of Economics, University of Cambridge.
- 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.
- 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.
- Pollitt, Michael, 2008. "The arguments for and against ownership unbundling of energy transmission networks," Energy Policy, Elsevier, vol. 36(2), pages 704-713, February.
- Pollitt, M., 2007. "The arguments for and against ownership unbundling of energy transmission networks," Cambridge Working Papers in Economics 0737, Faculty of Economics, University of Cambridge.
- Costello, Kenneth W., 2001. "Interregional Coordination versus RTO Mergers: A Cost-Benefit Perspective," The Electricity Journal, Elsevier, vol. 14(2), pages 13-24, March.
- R.A. Hakvoort & L.J. De Vries, 2002. "An economic assessment of congestion management methods for electricity transmission networks," Competition and Regulation in Network Industries, Intersentia, vol. 3(4), pages 425-467, September. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:rsc:rsceui:2009/59. 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: (RSCAS web unit)
If references are entirely missing, you can add them using this form.