Liberalizing the Dutch electricity market: 1998-2004

We describe the evolution of the structure of the Dutch electricity market since the E-Act 1998 that implemented the first EU Electricity Directive. The initial idea of the government was to combine liberalization in supply with concentration in generation, with the attempt to create a national champion that could compete on the European market. As the producers could not agree, the attempt failed and competition could develop. The production side now is less concentrated than in several other EU countries and the competition authority has played an active role in keeping it that way, among others by means of its intelligent analysis of the Nuon-Reliant merger, in which a VPP auction was proposed as a remedy. In contrast, regulation of the network business cannot be considered a success as bad drafting of the law prevented effective incentive regulation. Finally, the liberalization of the retail market for green energy, in effect since July 2001, has shown that retail competition may not yield many consumer benefits.