Table of Contents

Competition, Contracts and Electricity Markets

Competition, Contracts and Electricity Markets

A New Perspective

Loyola de Palacio Series on European Energy Policy

Edited by Jean-Michel Glachant, Dominique Finon and Adrien de Hauteclocque

This book fills a gap in the existing literature by dealing with several issues linked to long-term contracts and the efficiency of electricity markets. These include the impact of long-term contracts and vertical integration on effective competition, generation investment in risky markets, and the challenges for competition policy principles.

Chapter 9: Long-term Contracts and Competition Policy in European Energy Markets

Adrien de Hauteclocque and Jean-Michel Glachant

Subjects: economics and finance, competition policy, energy economics, industrial organisation, law - academic, energy law

Extract

Adrien de Hauteclocque and Jean-Michel Glachant 1 INTRODUCTION Today the allocation of regulatory powers in the European Union (EU) is increasingly biased in favour of the ex post enforcement of EU competition law (Hauteclocque 2009). The institutional structure of the European Union does not give the European Commission the power to ex ante alter property rights in the different member states and thus to carry an aggressive policy of horizontal de-integration which would probably deliver better and faster results (Green and Newbery 1997; Newbery et al. 2003). In addition, the lack of an EU-wide energy regulator with the effective power to monitor and regulate market developments, especially cross-border trade issues, is particularly detrimental to the integration and the good functioning of European energy markets (Glachant and Lévêque 2009). The third liberalization package is nonetheless initiating the creation of an Agency for the Cooperation of Energy Regulators (ACER). In order to optimize the development of the transmission grid at the European level and facilitate a consensual approach to the regulation of interconnection, the ACER is to create an institutionalized forum where decisions will be made more easily. However, the ACER is likely to be vested with limited discretionary powers in practice. We last note that whatever the scope of the ACER regulatory powers, it does not constrain in any way the use of EU competition law by the European Commission as Articles 101 and 102 Treaty on the Functioning of the European Union (TFEU) are superior to secondary EU...

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