LIBERALIZATION OF THE ELECTRICITY MARKET ‒ IS IT MEETING EXPECTATIONS?

Abstract

The fundamental declarative goal of the reform of the electrical power industry, i.e. the liberalization of the electricity market, has been and remains to raise the efficiency of the electrical power sector, primarily for the purpose of increasing the competitiveness of the economy. The following had been expected from the liberalization of the electricity market: reduction in the price of electricity, improvement in the level of service, reduction in the differences in prices among countries, the option for each customer to choose a supplier, and an increase in the efficiency of the sector by reducing the need for the construction and maintenance of reserve capacities. This work presents an investigation and analysis of the extent to which these goals for the liberalization of the electricity market have been achieved and are achievable, how successful the shift has been from a monopolistic organizational structure of the electrical power industry to a competitive structure, i.e. whether the liberalization of the electricity market has met expectations. Based upon assessment of the cost-benefit ratio from the liberalization of the electricity market, it can be said that liberalization will not achieve the primary goal for which it was initiated, which is reduction of the price of electricity. The goal of making prices uniform was also not achieved because there are still great differences in the prices of electricity among countries. There has been no significant shift in the organizational structure of the electrical power industry from monopolistic to competitive. Positive shifts have been achieved in raising the level of the quality of services, increasing the efficiency of the sector by reducing the need for the construction and maintenance of reserve capacities, and in the formal opening of the markets. These research findings confirm the hypothesis presented in the introduction to this work that the primary goals of the liberalization of the electricity markets have not been achieved. It can be concluded that the liberalization of the electricity market has not fulfilled expectations. Moreover, according to the current status of the reforms and the tendencies in these processes, these goals have not been achieved in the manner in which the initial reforms were imagined and defined.