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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 14: The Iberian Electricity Market: Towards a Common Market?

Maria Isabel R.T. Soares

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


Maria Isabel R.T. Soares INTRODUCTION Since the beginning of the 1990s, the Portuguese and Spanish economies have become steadily more closely entwined. In the beginning, the deregulation of certain utilities, namely electricity, on both sides of the frontier followed a similar model. However, since 1997 clear differences have emerged: market organization, regulation and power industry restructuring have become steadily more different, although strategic alliances between companies have made geographical, economic and cultural links more evident. This chapter examines the path followed by the deregulation of the electricity sector in Iberian countries and then identifies some of the issues, opportunities and challenges raised by closer integration. The analysis has been carried out from the viewpoint of Portugal, the smaller and less developed country. The chapter is divided into three main sections. The first deals primarily with the Portuguese case, and describes the various stages of the deregulation and market organization, market rules and privatization. The second section deals with the Spanish case and follows a similar methodology. The third section looks at the Iberian market as a whole and identifies some critical issues for the creation of an Iberian electricity market, which has been under discussion since the beginning of 2002. THE PORTUGUESE DEREGULATION MODEL From State-Owned Monopoly to Market Opening The Portuguese electricity industry has gone through dramatic changes since 1975, when its 13 separate mainland electricity utilities were nationalized. In 1976, these companies merged into a state-owned, fully integrated, monopolist company named Electricidade de Portugal...

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