Towards a Single Energy Market
Edited by Jean-Michel Glachant and François Lévêque
4. Harmonizing an eﬀective regulation in Europe Einar Hope and Balbir Singh INTRODUCTION The main motivation for the harmonization of regulation at the national and European levels is to facilitate the transition of the electricity sector from the traditional centrally planned framework to a decentralized framework that promotes economically eﬃcient, secure and environmentally sustainable supply of electricity to the European consumers. This calls for the establishment of a single integrated European electricity market based on competitive market-driven generation and regulated transmission and distribution networks characterized by open and non-discriminatory access promoting least-cost, reliable, secure and environmentally responsible operations and the future development of the electricity industry across Europe. The three key elements that determine the extent of market integration and competition in any restructuring of electricity markets are: network governance, sector structure and regulation. By network governance we mean how decisions are made and implemented within organizations.1 Sector structure is determined by what each market actor controls (by ownership or contractually), which in turn aﬀects their conduct (competitive or otherwise) and thus sets the stage for what is realizable through good network governance. Regulation is the visible hand that sets the boundaries for the decisions made by networks and market actors and is in this sense a ‘back-stop’ to governance and sector structure. Regulation in this context refers to both sector-speciﬁc network regulation and general competition regulation. The harmonization of regulation is basically concerned with the establishment of consistent ‘back-stops’ across jurisdictions. Consistency in this context...
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