The Role of 'Unbundling' in the Electricity Sector

Abstract

The Electricity Transmission System And The Internal Market Energy cannot be stored economically once produced. Furthermore, an electricity network is often a natural monopoly that cannot be duplicated in an economic manner and/or in a reasonably short time frame. Electricity may only be sold and acquired through a transmission system (which is an essential facility). It is self-evident that to create a real European electricity internal market there must be adequate interconnection capacity among Member States. At present, adequate capacity does not exist between many areas and at almost all European borders the interconnectors are congested. Therefore, several separate national energy markets currently exist (with few exceptions) within the European territory. As a consequence, ownership structure and management of the electricity transmission grid are now at the centre scene of the European energy policy for a sustainable, secure and competitive energy supply. This paper will, therefore, briefly analyse the reasons for the European debate oriented on a full ownership unbundling legislation strategy ("f-o-u-l-s"), the main legal issues coming with any such f-o-u-l-s unbundling and an example of unbundling of the electricity transmission activity as it was implemented in Italy, between 1999 and 2005.