EP 38

Gert Brunekreeft

Regulatory Issues in Merchant Transmission Investment

EP 38  | Non-Technical Summary | PDF

Abstract: Driven by fear of underinvestment in network assets, merchant investment in electricity transmission networks (MTI) is now legally allowed. Given that MTI is a real possibility, regulators face a new set of questions. After classifying different types of MTI, the paper raises and analyses regulatory questions, concentrating on the effect on competition, ownership questions, third-party-access regimes and must-offer provisions. Basically, the paper concludes that the light-handed approach of unregulated MTI supports a light-handed approach with respect to complementary measures as well. In many cases, it is justified to refrain from sector-specific arrangements because competition law, if necessary at all, will suffice. However, details matter.

Keywords: Electricity, Investment, Regulation, Transmission, Merchant