Liberalizing the Eu Energy Market

1718 Words Apr 18th, 2011 7 Pages
Q.1 What do you think are the economic benefit of liberalizing the EU energy market? Who stands to gain the most from liberalization?

The economic benefits of liberalizing the EU energy are followings.

First, greater efficiency leads to lower costs and prices, which is improving competitiveness. It is also crucial for companies that are competing in a more global market. As liberalization and the introduction of competition becomes more widespread across Europe this should lead to further efficiency gains, costs reductions and the potential for lower prices. A completely open European market will allow all consumers to benefit from the cheapest available sources of energy and will drive companies’ costs down based on economic scales.
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ON and RWE in Germany – to retain ownership of their gas and electricity grids, provided that they are subjected to outside supervision.

After liberalization, the transparency of each energy company has been increased. All energy company needs to follow the same regulations and restrictions among the market. Independent power marketing companies will be able to buy energy from the cheaper source, whether it is within national borders or elsewhere in the EU. The market for an energy provider is not just a region or nation, but also Europe. Till now, liberalization has increased the strength of dominant market actors and regional oligopolies are likely. At this point, the role of regulator increasingly important

After liberalization, privatization often occurs. For instance, nearly Czech model, they were selling State owned companies which is the whole electricity industry to private companies.

For participating in liberalization, energy producers have to increase their competiveness ability by investing utilities and increasing innovation within the energy industry. They have to break up existing companies into small parts and prevent monopolies. They have to allow new market actors to share the market. Energy producers need to follow the internal market rules and competition rules within EU. They need to provide energy supply reserved data to EU and allocate energy to areas most in need to

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