While Bartle stresses that national institutions may protract the introduction of electricity reform, his research is on a more general level and does not explicitly focus on the costs of adaptation resulting from compensating losers of reform and convincing opposing political veto players. By doing so, important nuances of national responses to exogenous reform pressures may be overlooked. This thesis addresses this gap by asking the following research question: What explains the variation in unbundling regime choice between European countries after the Third Electricity Directive? The example of ownership unbundling provides a relevant empirical example to unequivocally comprehend the redistribution of resources resulting from a liberalisation reform initiative. When governments plan to unbundle VIUs, they directly interfere with the interests of several private and public actors.
Thus, depending on the exact interest and governance configurations, full unbundling induces varying costs of compensation and (re-)negotiation for governments. I argue that an adaptation-cost-based account of member states’ reform capacities allows us to obtain a better understanding of the pace and timing of electricity sector liberalisation in the EU as well as processes of Europeanisation more generally. The research question will be addressed through the lens of the rational-choice variant of Börzel & Risse’s goodness-of-fit framework which is complemented by the historical institutionalist notion of path dependencies.
Table of Contents
Introduction
I. Unbundling as Key Ingredient for the Internal Market of Electricity
Unbundling Options after the Third Electricity Directive
Costs and Benefits of Ownership Unbundling
II. Theoretical Framework
The Goodness-of-Fit Hypothesis
Rational-Choice Institutionalism
Path Dependence
III. Research Design
Variables and Hypotheses: The Determinants of Unbundling Regime Choice
Methodology
IV. Quantitative Analysis
Decision-Theoretic Model
V. Qualitative Analysis
Case Selection
Case Study Germany
Case Study Netherlands
Conclusion
References
Objectives & Themes
This thesis examines the variation in unbundling regime choices among European countries following the Third Electricity Directive, arguing that domestic institutional constraints and adaptation costs significantly influence these choices. It aims to explain why some states adopted 'hard' unbundling regimes while others maintained 'softer' models, highlighting the impact of veto players and path dependencies.
- The impact of internal veto players on policy reform
- Domestic ownership structures of vertically integrated utilities (VIUs)
- The role of cost-based versus incentive-based regulatory schemes
- Path dependencies and historical 'lock-ins' in electricity sector policy
- Comparative analysis of liberalisation trajectories in Germany and the Netherlands
Excerpt from the Book
Ownership Unbundling (OU)
This is the most rigorous form of disintegration and the preferred model by the Commission as articulated in Article 11 of Directive 2009/72/EC (European Parliament & Council of the European Union, 2009). Ownership unbundling requires companies along the value chain to be fully separate organisations with no associations in terms of ownership. This model makes formal strategic coordination practically impossible and is thus most conducive to competition (see Figure 1 on page 3). Within the third directive, OU mainly concerns the separation of transmission system operators (TSOs) from generation and distribution units as transmission ownership bears the highest potential for discrimination. However, the same logic can be applied to low-voltage distribution system operators (DSOs) (Brunekreeft & Meyer, 2009). Currently, the Netherlands is the only European country using full DSO-unbundling.
Summary of Chapters
Introduction: Provides the background on electricity market liberalisation and states the research question regarding the variation in unbundling regime choices.
I. Unbundling as Key Ingredient for the Internal Market of Electricity: Details the various unbundling models (OU, ISO, ITO) available after the Third Electricity Directive and evaluates the social welfare implications.
II. Theoretical Framework: Introduces the goodness-of-fit hypothesis, rational-choice institutionalism, and path dependence as theoretical lenses to explain institutional change.
III. Research Design: Develops specific hypotheses regarding ownership structures, veto players, and regulatory schemes, and outlines the methodology for empirical testing.
IV. Quantitative Analysis: Presents a Fisher’s exact test and a decision-theoretic model to assess the statistical significance of domestic constraints on unbundling choices.
V. Qualitative Analysis: Compares Germany and the Netherlands to unpack how historical paths and sub-state actors influenced specific implementation outcomes.
Conclusion: Synthesizes the findings, confirms the role of domestic institutional constraints, and reflects on the broader implications for Europeanisation.
Keywords
Europeanisation, Ownership Unbundling, Electricity Market, Liberalisation, Vertical Integration, Veto Players, Path Dependence, Regulatory Schemes, Germany, Netherlands, Third Electricity Directive, Institutional Change, Public Policy, Market Reform, Infrastructure.
Frequently Asked Questions
What is the central focus of this master thesis?
The thesis investigates why European countries adopted different unbundling regimes in their electricity sectors after the EU's Third Electricity Directive, specifically focusing on the variation between 'hard' and 'soft' unbundling models.
What are the primary factors influencing a government's choice of unbundling regime?
The research identifies three key domestic institutional constraints: the existence of internal veto players, the domestic ownership structures of utilities prior to regulation, and the type of transmission network pricing regulation.
What is the core research question addressed in this study?
The study seeks to answer: What explains the variation in unbundling regime choice between European countries after the Third Electricity Directive?
Which scientific methods are employed to conduct this research?
The author uses an explanatory mixed-method design, combining a quantitative Fisher's exact test of 28 European countries with a comparative qualitative case study of Germany and the Netherlands.
What content is covered in the main body of the work?
The main body examines the costs and benefits of unbundling, establishes a theoretical framework based on rational-choice and historical institutionalism, presents quantitative statistical results, and provides detailed case studies of the German and Dutch electricity sectors.
How would you characterize this work using key terms?
The work is characterized by terms such as Europeanisation, electricity market liberalisation, path dependence, vertical integration, and regulatory capture.
Why did the German government opt for a 'soft' unbundling regime?
Germany was heavily constrained by the interests of large incumbent utilities and the 'cooperative federalism' of its Länder, which sought to maintain their strategic influence and reliable income from network ownership.
How does the Dutch experience differ from the German one?
The Netherlands demonstrated a more progressive stance toward unbundling, moving towards full ownership unbundling of distribution networks, as central authorities faced less resistance from sub-state actors compared to the German context.
Does the thesis suggest that incentive regulation is better than cost-based regulation for market reform?
The findings suggest that incentive regulation is positively associated with ownership unbundling, as cost-based regulation provides guaranteed profits that disincentivise network operators from supporting more competitive, hard-unbundling regimes.
- Quote paper
- Nico Miguel (Author), 2020, The Limits of Europeanisation. Domestic Constraints on Ownership Unbundling of National Electricity Systems, Munich, GRIN Verlag, https://www.grin.com/document/908564
