Limits for competition in restructured electricity markets - The European perspective

In this paper the most important experiences and discussions on introducing competition in Western European electricity markets are presented. It is analyzed to what extent the vision of a real competitive electricity market can be put into practice. The major conclusion is that in countries where liberalization was already started moderate price decreases took place yet only for large industrial customers. Furthermore, due to differences in transmission pricing models and in the organization of the market in the EU member countries it is hard to believe that in the near future a real competitive electricity market will emerge in Western Europe. Therefore, in the long run, electricity price will be more equal all over Europe, yet not necessarily much cheaper. Probably only a strong new and uniform regulation on an EC level can avoid increasing mergers and growing strategic alliances and, hence, bring about really competitive electricity prices.