TY - JOUR

T1 - Network access charges, vertical integration, and property rights structure-experiences from the German electricity markets

AU - Wein, T

AU - Growitsch, Christian

PY - 2005/3/1

Y1 - 2005/3/1

N2 - After the deregulation of the German electricity markets in 1998, the German government opted for a regulatory regime called negotiated third party access, which would be subject to ex-post control by the federal cartel office. Network access charges for new competitors are based on contractual arrangements between energy producers and industrial consumers. As the electricity networks are incontestable natural monopolies, the local and regional network operators are able to set (monopolistic) charges at their own discretion, restricted only by the possible interference of the federal cartel office (Bundeskartellamt). In this paper we analyze if there is evidence for varying charging behaviour depending on the supplier's economic independence (structure of property rights) or its level of vertical integration. For this purpose, we hypothesise that incorporated and vertically integrated suppliers set different charges than independent utility companies. Multivariate estimations show a relation between net work access charges and the network operator's economic independence as well as level of vertical integration: on the low voltage level for an estimated annual consumption of 1700 kW/h, vertically integrated firms set - in accordance with our hypothesis - significantly lower access charges than vertically separated suppliers, whereas incorporated network operators charge significantly higher charges compared to independent suppliers. These results could not have been confirmed for other consumptions or voltage levels.

AB - After the deregulation of the German electricity markets in 1998, the German government opted for a regulatory regime called negotiated third party access, which would be subject to ex-post control by the federal cartel office. Network access charges for new competitors are based on contractual arrangements between energy producers and industrial consumers. As the electricity networks are incontestable natural monopolies, the local and regional network operators are able to set (monopolistic) charges at their own discretion, restricted only by the possible interference of the federal cartel office (Bundeskartellamt). In this paper we analyze if there is evidence for varying charging behaviour depending on the supplier's economic independence (structure of property rights) or its level of vertical integration. For this purpose, we hypothesise that incorporated and vertically integrated suppliers set different charges than independent utility companies. Multivariate estimations show a relation between net work access charges and the network operator's economic independence as well as level of vertical integration: on the low voltage level for an estimated annual consumption of 1700 kW/h, vertically integrated firms set - in accordance with our hypothesis - significantly lower access charges than vertically separated suppliers, whereas incorporated network operators charge significantly higher charges compared to independent suppliers. These results could not have been confirmed for other consumptions or voltage levels.

KW - Economics

KW - Network access charges

KW - Property rights structure

KW - Vertical integration

UR - http://www.scopus.com/inward/record.url?scp=18744382439&partnerID=8YFLogxK

UR - https://www.mendeley.com/catalogue/ca98175f-482e-3266-8269-ddfb82a40cdf/

U2 - 10.1016/j.eneco.2004.03.003

DO - 10.1016/j.eneco.2004.03.003

M3 - Journal articles

VL - 27

SP - 257

EP - 278

JO - Energy Economics

JF - Energy Economics

SN - 0140-9883

IS - 2

ER -