Seeking the Single European Electricity Market: Evidence from an Empirical Analysis of Wholesale Market Prices

The Single European Act (EU, 1988) established the general principle of a single European ‘internal market’, rather than many separate national markets, for goods and services in the European Union (EU). The European Commission (EC) working document on the Internal Energy Market (EC, 1988) was published as a direct result, and led to a range of legislation being adopted throughout the 1990s that explicitly aimed to fully integrate the separate European national electricity markets, with the aim of increasing competition in the European electricity industry, and hence reduce prices being paid by consumers. The Price Transparency Directive (EU, 1990a) sought to promote competition by improving the transparency of electricity (and gas) prices charged to industrial consumers. The Electricity Transit Directive (EU, 1990b) and the Gas Transit Directive (EU, 1991) aimed to remove obstacles to cross-border exchange of electricity (and gas) by asking member states to facilitate transit through transmission grids, though it did not compel them to do so.

By: J. Bower

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