Copyright (c) 2006 Federal Energy Bar Association
Energy Law Journal
ARTICLE: REGULATION AND LIBERALIZATION OF THE EUROPEAN ELECTRICITY MARKET - A GERMAN VIEW
27 Energy L. J. 423
Prof. Dr. Thomas von Danwitz* +
As of late, "liberalization" and "regulation" of electricity markets have devolved into expressions of largely inflated use, perhaps the safest and fastest way for those terms to become meaningless. But, properly understood, these terms remain meaningful, reflecting a fundamental change in the legal framework designed for energy markets; a change which started in the U.S. and which now, after some delay, is occurring in Europe as well. Liberalization, for purposes here, refers to the abolition of the rights of monopolies, rights which accorded European and U.S.-American energy suppliers protection against competition. Regulation, as used here, has a double meaning. First, it relates to measures taken or enacted to ensure competition in liberalized (energy) markets. In this respect, regulation constitutes a type of sector-specific competition law, adjusted to meet the economic and technical characteristics of the various energy markets. Second, regulation makes it possible to take account of the fundamental importance of secure and reliable energy supply for the public welfare. Under this view of regulation, the vagaries of energy supply are not left to the forces of supply and demand. Instead, the imposed regulation specifies specific standards - for example, with regard to so-called services of general interest and to security of supply. In so doing, these regulations limit private market development. Thus, regulation is both a result of, and a necessary accompaniment to market liberalization. It is important to bear in mind that, while some form of regulation may be needed to ...
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