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Electricity Reform in Europe: Towards a Single Energy Market

March 2009

Edward Elgar

Edited by Jean-Michel Glachant, Loyola de Palacio, Professor, European University Institute, Florence and Director of the Florence School of Regulation, Italy and François Lévêque, Professor of Law and Economics, École des mines de Paris, France.

The realisation of a European internal market for energy is still a work in progress. Written by leading European scholars and discussed with major energy stakeholders, this book presents a thorough analysis of the motives and methods needed to achieve a single European energy market.

The authors discuss the critical issues surrounding an internal European energy market including: market design, competition and market power, sustainable energy versus the market, regulation and harmonisation, benchmarking and indicators, modelling of competition, market prices and energy forecasts. They provide a multi-disciplinary assessment of the ‘best way’ to build the market base of a future European energy policy.

Electricity Reform in Europe will be of great interest to decision makers and managers in the energy industry or business sector as they will be able to see the whole European energy policy ‘picture’ beyond their own corporate interests. The book will also appeal to national and European energy administrations, regulatory bodies and policy makers providing a synthesis of all relevant policy issues.

"The SESSA study on the Internal Energy Market was an important and influential contribution towards the Commission’s proposal for a third package of proposals, intending to bring more effective competition and better security of supply to Europe’s energy markets. This volume, based on the results of the study is an important and welcome contribution to the ongoing debate on these proposals." – Andris Piebalgs, Commissioner for Energy at the European Commission.

"The chapters in this book are written by the leading European scholars who have studied the structure, behavior and performance of liberalised electricity markets in many European countries as well as in other regions of the world. Both the analyses and the policy recommendations contained in this volume are well worth careful consideration by policymakers in Europe, as well as by policymakers in other countries that are seeking to adopt successful electricity sector liberalisation programs." – From the foreword by Paul L. Joskow, Massachusetts Institute of Technology (MIT), US.

"Dynamism or dissipation? Competition or national champions? Will enlargement promote or delay reform? Energy economists contemplate the challenges posed by the “restless and discontent” European Commission." – Stephen Littlechild, University of Birmingham and Judge Institute for Management Studies, University of Cambridge, UK.

"The challenge of European electricity reform is being met, although gradually, delays notwithstanding. This book provides precious help in spotting where the necessary further efforts should be directed. In the US mistakes and delays have occurred, no less than in Europe, but an aggressive federal regulator (absent in Europe) is working to overcome them. Electricity markets do not happen, they have to be built. Here are suggestions for a workable European market design. No ideology, just competence and wisdom from both theory and experience. Will Europe learn?" – Pippo Ranci, Università Cattolica del Sacro Cuore, Italy

Contents:

Foreword: US vs EU Electricity Reforms Achievement
Paul L. Joskow

PART I: PROPOSALS FOR ACHIEVING THE EUROPEAN UNION ELECTRICITY MARKET BY 2009 1. The Electricity Internal Market in the European Union: What to do Next?
Jean-Michel Glachant and François Lévêque

PART II: ASSESSMENT OF CORE ISSUES IN THE MAKING OF THE EUROPEAN UNION ELECTRICITY MARKET 2. Refining Market Design
David Newbery

3. Addressing Market Power and Industry Restructuring
Lars Bergman

4. Harmonizing an Effective Regulation in Europe
Einar Hope and Balbir Singh

5. Ensuring EU Enlargement to New Member States
Christian Von Hirchhausen and Georg Zachmann

6. Investing for Sustainability
Ignacio Pérez-Arriaga and Julián Barquín

7. Policy Assessment and Good Practices
Richard Green, Arturo Lorenzoni, Yannick Pérez and Michael Pollitt

PART III: IN-DEPTH STUDIES OF THREE CHALLENGES FOR THE EUROPEAN UNION ELECTRICITY MARKET (MEASURING MARKET POWER, CONVERGENCE OF WHOLESALE PRICES AND ENERGY POLICY) 8. How Well Can One Measure Market Power in Restructured Electricity Systems?
Yves Smeers

9. The EU Integration of the New Member States’ Electricity Markets – Testing for Wholesale Price Convergence Using the Kalman Filter
Georg Zachmann

10. Long-Term Scenarios for the Strategic Energy Policy of the EU
Pantelis Capros and Leonidas Mantzos

Postface: Design and Regulation of EU Energy Markets – Between Competition Policy and Common Energy Policy
Jorge Vasconcelos  

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