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| 1 |
ID:
092797
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| Publication |
2009.
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| Summary/Abstract |
Long-term supply contracts often have ambiguous effects on the competitive structure, investment and consumer welfare in the long term. In the new market context, these effects are likely to be worsened and thus even harder to assess. Since liberalization and especially since the release of the Energy Sector Inquiry in early 2007, the portfolio of long-term supply contracts of the former incumbents have become a priority for review by the European Commission and the national competition authorities. It is widely believed that European Competition authorities take a dogmatic view on these contracts and systemically emphasize the risk of foreclosure over their positive effects on investment and operation. This paper depicts the methodology that has emerged in the recent line of cases and argues that this interpretation is largely misguided. It shows that a multiple-step approach is used to reduce regulation costs and balance anti-competitive effects with potential efficiency gains. However, if an economic approach is now clearly implemented, competition policy is constrained by the procedural aspect of the legal process and the remedies imposed remain open for discussion.
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| 2 |
ID:
110381
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2011.
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| Summary/Abstract |
The regulation of merchant transmission investment (MTI) has become an important issue in the EU electricity sector, subsequent to the granting of authorizations by European authorities to five merchant projects: BritNed, Estlink, the East West Cables, NorGer and recently a merchant line connecting Italy and Austria. The creation of a new Agency for the Cooperation of Energy Regulators (ACER) at the EU level, which has decision-making powers on MTI, therefore presents a unique opportunity to question and re-design the current European policy. This paper shows that the recent decisions concerning MTI may suffer a strong bias against dominant electricity generators while incumbent Transmission System Operators (TSOs) or new entrant TSOs are generally favored by national regulators and the European Commission (EC). This strategy is misguided as it fails to recognize both the new incentives of generators to develop MTI and the conflict of interest between the regulated and non-regulated activities of incumbent TSOs. Letting dominant generators undertake MTI is indeed generally beneficial as long as potential abuses of dominance are mitigated. To deter possible anti-competitive effects, we propose a new and feasible allocation of regulatory powers based on a clear demarcation between the market monitoring powers of ACER and the antitrust powers of the EC.
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