The liberalization of Europe's electricity market

INTRODUCTION The importance of electricity in the world economy can hardly be underestimated. It serves as an input in almost every industry and we, as people have grown more and more dependent on electricity. The electricity sector was, like most other utilities, traditionally a nationalized sector in many countries across Europe. In many cases a state monopoly was installed to dominate the supply in the whole sector in an effort to realise a 'social' optimum …

…to a liberalized industry where competition is possible on the levels of generation and distribution. The transmission grid is considered to be a natural monopoly, and is run by a single organization that is responsible for maintenance, access and terms of access. An example is the NGC, the National Grid Company in the UK. Many countries have implemented regulation considering this transmission, with fixed conditions and tariffs for the use of the grid (Pepermans, Proost, 2000).