Vertical separation of the energy-distribution industry; an assessment of several options for unbundling

Machiel Mulder, Victoria Shestalova and Mark Lijesen

No 84, CPB Document from CPB Netherlands Bureau for Economic Policy Analysis

Abstract: The Dutch Minister of Economic Affairs has proposed to replace the currently implemented structure of legal unbundling of the energy distribution industry by ownership unbundling. In this study we analyse the costs and benefits of this proposal. We compare the proposal to the current situation and to two alternative options that strengthen legal unbundling. We identify four mutually-related categories of benefits: better performance of networks, more efficient regulation, improved effectiveness of competition, and benefits of privatisation; and three categories of costs: one-off transaction costs, loss of economies of scope and the risk of less investment in generation.The analysis highlights that the benefits depend on the future development in small-scale generation and on allocation of the management of transmission networks. Mainly because of the uncertainty about the future role of small-scale generation and the uncertainty about the magnitude of the one-off transaction costs related to cross-border leases, the net welfare effect of ownership unbundling at the distribution level is ambiguous. We identify an alternative route for achieving some of the benefits considered.

JEL-codes: L51 Q40 Q48 (search for similar items in EconPapers)
Date: 2005-04
New Economics Papers: this item is included in nep-com, nep-ene and nep-net
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (18)

Downloads: (external link)
https://www.cpb.nl/sites/default/files/publicaties ... tions-unbundling.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpb:docmnt:84

Access Statistics for this paper

More papers in CPB Document from CPB Netherlands Bureau for Economic Policy Analysis Contact information at EDIRC.
Bibliographic data for series maintained by ().