Electricity, from Monopoly to Competition

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The national electricity markets of the Member States of the European Union are currently being privatised in compliance with a specific Commission directive. The process is encountering much resistance and has reached different stages of development in the various countries concerned. It is, however, virtually unstoppable and will, predictably, lead to a progressive broadening of scope for competition and the market, much as in the United States in recent years. In his essay (The mechanisms of the market today), Henri Lepage describes the mechanisms and institutions through which it is currently possible to create a competitive market in the electricity sector, safeguarding the principle of economic efficiency and ensuring that the energy consumed has been produced at the lowest cost possible. To do this it is crucial to define and publicise a spot price for electricity in the various time bands by introducing auctions mechanisms among producers. The essay also shows how such competitive procedures may lead to a decline in the price of electricity. In the next essay (The mechanisms of the market: what they will be like in 2015), the same author describes the probable future evolution of the European market on the basis of what is already happening in the United States. The deregulated market will be characterised by an extreme segmentation of prices and tariffs and by the emergence of intermediaries specialised in selling the good. Finally, it is highly likely that electricity will be "commoditised", that is to say transformed into a basic raw material, negotiable on markets in cash or on credit or in derivatives, just like any other. In his essay (Uncertain Italian liberalisation), Ugo Bertone, finally, examines the decree for the deregulation of the electricity market passed last February by the Italian government. Many reservations can be advanced about the provision, especially the fact that ENEL, former public monopoly, still enjoys a dominant role in the production and distribution of electricity. The process the decree has triggered will nonetheless lead to an effective liberalisation of the market over the next few years. In this respect, the moment of truth will come when ENEL is quoted on the stock market.

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