Energy sector inquiry : market power and concentration in the EU energy markets

Transcription

1 IAEE 08 Istanbul Turkey Energy sectr inquiry : Séance 5 : Les barrières à l entrée market pwer and cncentratin in the EU energy markets Carle LE HENAFF carle.le-henaff@gazdefrance.cm Sphie MERITET Sphie.meritet@dauphine.fr June 2008

2 Intrductin Intrductin Sectin 1: Survey f the literature Sectin 2: Results f the DG cmpetitin energy sectr inquiry Sectin 3: Discussin n a new analysis Cnclusin On June 2005 the DG Cmpetitin launched a sectr inquiry n the Eurpean electricity and gas markets in rder t evaluate the level f cmpetitin. Releasing its preliminary results in February 2006, the DG Cmpetitin stated that the level f cmpetitin was unsatisfactry. In January 2007, the Cmmissin cnfirmed it and clearly affirmed that further actins wuld be necessary t create cmpetitive energy markets in the Eurpean Unin. Gals f the wrk : 1. Analyse f the ecnmic apprach the EU cnsidered t measure market cncentratin and market pwer 2. Intrduce ther elements that need t be taken int accunt t analyse the level f cmpetitin Definitin f the relevant market Security f supply Multi markets cmpetitin Firm strategies and especially cnvergence gas-electricity Shrt term lng term efficiency...mre than an ex pst static structure apprach

3 Agenda f the presentatin Sectin 1: Definitin f market pwer and cncentratin indicatrs Intrductin Sectin 1: Survey f the literature Sectin 2: Results f the DG cmpetitin energy sectr inquiry Sectin 3: Discussin n a new analysis Sectin 2: Results f the DG cmpetitin energy sectr inquiry Sectin 3: Discussins n the different appraches that culd be added in the Eurpean sectr inquiry Cnclusin

4 Sectin 1: Market pwer and cncentratin indicatrs Survey literature n : Intrductin Sectin 1: Survey f the literature Sectin 2: Results f the DG cmpetitin energy sectr inquiry Sectin 3: Discussin n a new analysis Cnclusin Relevant market - definitin Prduct Gegraphic area Time Market pwer Definitin in electricity and natural gas markets Measure f market pwer Mitigatins f market pwer Structure apprach with the cncentratin ratis Traditinal cncentratin ratis Drawbacks f the traditinal measures New tls Main cnclusin?

5 Sectin 2: Results f the DG Cmp energy sectr inquiry Intrductin Sectin 1: Survey f the literature Sectin 2: Results f the DG cmpetitin energy sectr inquiry Sectin 3: Discussin n a new analysis Cnclusin Significant prblems identified in gas and electricity markets: Market cncentratin Vertical freclsure Market integratin Lack f transparency Price frmatin Lack f cmpetitin in retail markets Prblems with balancing markets LNG markets Analysis f barriers t creating effective cmpetitin in EU energy market Lack f implementatin f the Directives and Regulatins? Inadequate pwer f regulatrs? Need : new legislatin?

6 Sectin 2: Results f the DG Cmp energy sectr inquiry In respnse t these results : Structural remedies and regulatry actin Intrductin Sectin 1: Survey f the literature Philippe LOWE: Sectin 2: Results f the DG cmpetitin energy sectr inquiry Sectin 3: Discussin n a new analysis Cnclusin «Remedies arising frm cmpetitin cases can be behaviural r structural. ( ). As market cncentratin levels are very high in mst energy markets, cmpetitin authrities are willing t prevent the market structure frm further deterirating. ( ) Accrding t Article 7 f Regulatin 1/2003 structural remedies can be impsed where there is a substantial risk f a lasting r repeated infringement that derives frm the very structure f the undertaking, r where behaviural remedies wuld be mre burdensme n the dminant undertaking than a structural slutin.» Surce : Philip LOWE (2007), Effective unbundling f energy transmissin netwrks: lessns frm the Energy Sectr

7 Sectin 2: Results f the DG Cmpetitin energy sectr inquiry What are the results f structural remedies n scial welfare? Intrductin Sectin 1: Survey f the literature Sectin 2: Results f the DG cmpetitin energy sectr inquiry Is there a link?: high level f cncentratin structural remedies Sectin 3: Discussin n a new analysis Cnclusin

8 Sectin 3: New analysis Intrductin Sectin 1: Survey f the literature Sectin 2: Results f the DG cmpetitin energy sectr inquiry Sectin 3: Discussin n a new analysis Cnclusin Results f the EU inquiry end f the analyis? NO! Jkw and Schmalnesee (1983) : If deregulatin is t play a rle in helping t imprve the efficiency with which electricity is prduced and used, it must be intrduced as part f a lng-term prcess that als encmpasses regulatry and structural refrm» (p.221). In the EU, the cnstitutin f an electric pwer - gas ligply induced a situatin f multimarket cntacts which is favurable t cllusin,...a phenmenn quite widespread in many sectrs. But the verall evaluatin will als depend f the dynamic prperties f this new industrial structure: it means the ability t guarantee the cntinuity f services, investments and innvatins... It is necessary t analyze - which is nt easy - the prperties f electric gas ligply in terms f dynamic efficiency

9 Sectin 3: Other cnsideratins: natural gas industry Intrductin Sectin 1: Survey f the literature Sectin 2: Results f the DG cmpetitin energy sectr inquiry Sectin 3: Discussin n a new analysis Cnclusin The natural gas industry is capital intensive High transmissin cst Geplitics cncerns Natural gas is a substituable energy Several reginal natural gas markets (cntrary t il) Natural gas netwrk is less develped (cmpared t electricity netwrks) Nt all cnsumers have access t natural gas

10 Cnclusin Intrductin A lt f wrk ahead fr the Cmmissin and natinal regulatrs t create an Integrated Eurpean Energy Market Shift frm a single market t reginal markets Sectin 1: Survey f the literature Sectin 2: Results f the DG cmpetitin energy sectr inquiry Sectin 3: Discussin n a new analysis Debate n structural remedies First Draft Cnclusin