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Competition in European Electricity Markets

Competition in European Electricity Markets

A Cross-country Comparison

Edited by Jean-Michael Glachant and Dominique Finon

This book focuses on the diversity of electricity reforms in Western Europe, drawing evidence from ten European Union memberstates plus Norway and Switzerland as associate members. The contributors analyse the various ways of introducing competition in the European electricity industries, and consider both the strategies of electricity companies and their behaviour in electricity marketplaces. They also offer an explanation of the differences of reforms by the institutions and the industrial structures of each country which shape the types of marketrules, industrial restructuring and public service regulations which have been adopted.

Chapter 10: Opening the Swiss Electricity Market to Competition

Franco Romerio

Subjects: economics and finance, competition policy, energy economics, industrial organisation


Franco Romerio INTRODUCTION Market liberalization means the Swiss electricity sector is undergoing radical change. In this chapter I shall outline those changes in the light of the initial situation. From an institutional point of view, the organization of the Swiss electricity sector is clearly influenced by the federal context: the confederation provides legislative guidelines, while the cantons retain a marked degree of autonomy. Switzerland is home to some 1200 electrical companies, of which seven play a dominant role. In most cases the capital belongs to public authorities; however, several private companies play a major role at local, regional or inter-regional level. Until very recently, the market was closed to competition. Although not part of the European Union, Switzerland does represent a focal point for European interconnection. Hydroelectric power stations with reservoirs1 mean Switzerland can help cover peaks on the Central European network. I shall begin by presenting the main characteristics of electricity consumption and production in Switzerland, and of external trade in electricity. I shall then examine the organization of the market, dispatching and networks, the relations between electrical companies and between these and public authorities. I shall also comment on prices, costs, concession fees and water royalties, as well as the question of ‘stranded investments’ in hydroelectric and nuclear power plants. I shall conclude by outlining the federal electricity market legislation of 15 December 2000, the legal basis for the process of liberalization which began de facto in 1999. CONSUMPTION, GENERATION AND EXTERNAL TRADE On average, electricity generation...

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