The Difficulty to Behave as a (regulated) Natural Monopolist – The Dynamics of Electricity Network Access Charges in Germany 2002 to 2005

Thomas Wein (wein@uni-lueneburg.de) and Heike Wetzel
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Thomas Wein: Institute of Economics, Leuphana University of Lüneburg

No 62, Working Paper Series in Economics from University of Lüneburg, Institute of Economics

Abstract: Reviewing the development of network access charges in the German electricity market since 2002 reveals significant variation. While some firms continually increased or decreased their access charges, a variety of firms exhibited discontinuousn behavior with price changes in both directions. From an economic viewpoint this price setting turbulence is astonishing because grid operators are non-contestable natural monopolists, which in this time period were regulated by Negotiated Third Party Access (NTPA). Depending on the e ectiveness or ine ectiveness of NTPA,expected behavior would be either regulated average cost prices or monopoly prices, but not the observed turbulence. Although in 2005 NTPA scheme was replaced by a Regulated Third Party Access (RTPA) scheme with a regulator, an analysis of the factors influencing the price setting behavior within this period o ers valuable information for the new regulator and the still discussed new incentive regulation, which is expected to start in 2009. Using multivariate estimations based on firm data covering the years 2000-2005, we test the hypotheses that asymmetric influence of regulatory threat, di erent cost and price calculation knowledge, strategic use of structural features and the obligation to publish specific access charges have influenced the electricity network access charges in Germany.

Keywords: Keywords: deregulation; natural monopoly; power industry (search for similar items in EconPapers)
JEL-codes: D42 L43 L94 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2007-09-18
New Economics Papers: this item is included in nep-com, nep-ene, nep-knm, nep-mic and nep-reg
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