OWNERSHIP UNBUNDLING OF ENERGY COMPANIES -|
WILL IT BE WORTH IT?
|In the process of liberalisation of the energy markets, there is a continuing debate on what additional measures should be taken to enhance competition in production and retail.
As the next step, the EU Commission strongly opts for ownership unbundling, which is a strict separation of the network from the competitive activities. In its proposal for a third legislative package, the commission leaves EU member countries a choice between this strict form of unbundling, and the less far reaching alternative of an independent system operator (ISO).|
The aim of UNECOM is to analyse and measure the effects of vertical unbundling. Such an assessment needs to take economic, technical and legal issues into account. However, comprehensive studies on the actual effects of unbundling are rare. Many of them focus on one of these aspects, leaving neighbouring questions more or less open. More importantly, quantitative assessments of welfare effects are still scarce, which is predominantly due to a previous lack of data. This project aims at filling this gap in current research.
|UNECOM is an interdisciplinary research project, covering theoretical as well as empirical insights from|
The study focuses on the following research questions:
- Business Administration
To emphasize the European scope of the project, five universities from three European countries will participate as research partners.
- "Will it be worth it?" Will the benefits of ownership unbundling, over and above effective legal and functional unbundling, outweigh the cost?
- "What works and what not?" If some form of unbundling is implemented, how should this look like and what are the effects of various forms of unbundling?
|Research Issues in More Detail|
More specifically, the four disciplines involved in UNECOM will deal with the following issues:
|What are the welfare effects associated with different measures of unbundling?|
On the basis of a social-cost-benefit-analysis (SCBA) and an econometric approach, the relative importance of economic arguments will be evaluated. Will benefits outweigh the cost? An important issue will be to examine the effects on investment as a main factor for future reliability of energy supply.
- Qualitative assessment. Comprehensive analysis of economic relations within the energy sector: What is the state of the art in economic theory?
- Quantitative assessment. Filling the gap in measuring pros and cons: What are the empirical aspects of unbundling?
|2. Business Administration and Management|
|How are organizational patterns affected by different forms of unbundling?|
- Re-organization of tasks: What impacts on possibilities and incentives for discrimination can be expected?
- Losing internal synergies: How important are economies of scope in practice?
- Changes in corporate governance: How will internal and external relations be affected, and what does this mean for costs and incentives for investment
|Which are the legal issues raised by ownership unbundling?|
- Company / corporate law. Corporate governance faces new challenges: Which legal adjustments will be necessary?
- Public and constitutional law. Ownership as a fundamental right: Does ownership unbundling violate constitutional law?
- Competition law and regulation. Mitigating concentration and market power: Can competition law justify divestiture?
|4. Institutions and Technology|
|What are the technological challenges resulting from the change of market structures?|
- Technical functioning: How can institutional arrangements contribute?
- System performance: What impacts on technical reliability, economic efficiency and public services can be expected?
- Trade-offs: How are performance characteristics interrelated?