From a competition aspect, it would seem sensible and logical to remove network operations from the sphere of influence of upstream and downstream market participants. However, when it comes to practical implementation, substantial problems arise. The economists fear that the EU Commission’s favored option of ownership unbundling could spark endless legal battles given the constitutional difficulties entailed in ownership transfer – with counterproductive repercussions for competition.
Will unbundling energy companies generate more competition on the electricity market?
The Allianz Dresdner Economic Research unit is also skeptical about the EU Commission’s alternative proposal to transfer the running of networks to an Independent System Operator (ISO). The ISO model would avoid the problem of separate ownership and could therefore be implemented much more swiftly than full Ownership Unbundling. However, this model also gives rise to new problems. Critical among them, the question as to who decides on network investment.
All in all the economists at Allianz Dresdner Economic Research come to the conclusion that the unbundling of energy companies as a means to boost competition on the electricity market is overestimated. Competition policy should therefore focus its efforts first and foremost on countering the existing concentration of power on the energy market.
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