Restructuring the Slovenian ElectricityIndustry: The Benefits and Costs of Introducing the Electricity Market

Nevenka Hrovatin

Eastern European Economics, 2001, vol. 39, issue 5, 6-30

Abstract: In 1999, Slovenia adopted the Energy Law, which is set to significantly change the way its electric utilities operate. Liberalization will take place in two stages. The first stage will run from April 15, 2001, to January 1, 2003, when eligible customers will be allowed to purchase electricity freely at home. After 2003, the free purchasing rights will be extended to imports. The liberalization and introduction of the electricity market will require a tremendous change in the operating philosophy of the entire Slovenian electricity sector. This article attempts to evaluate the effects of market opening for each stage separately. Emphasis is placed on the impacts of market opening on domestic prices for eligible and noneligible customers, on distribution effects as well as on allocative and production efficiency. The magnitude of stranded investments in conjunction with options for their recovery are also addressed.

Date: 2001
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