Restructuring of the electricity market within the European Union

Abstract

This study covers electricity utilities in the European Union. When reviewing countries in detail, not all the Member States have been studied and analysed, as otherwise the volume of material to be included would be excessive to the requirements of this dissertation. The markets that will first be discussed are the most liberalised ones. These are the UK, the Nordic region, followed by Germany. The next country to be discussed is ltaly being a country, which liberalised at a lesser pace. France is also discussed, in view of it having delayed implementation. A large number of European electricity utilities are restructuring their operations in order to cut dawn on costs and increase operational efficiencies. This was brought about by the anticipated loss of markets following the introduction of competition as a result of directives implemented by the European Union. Utilities across the continent are changing the way they function and operate in order to better prepare themselves far the competitive environment. These changes, or restructuring have been varied and diverse. Some utilities have had to unbundle their operations and create separate business units, such as separating generation from supply. On the other hand there are some utility companies that have chosen to expand their operations into different areas, resulting in the creation of a multi-utility, supplying a mix of electricity, telecom, water and gas services. Some utilities have divested certain business units in order to refocus company operations. A more common trend is that of merger and acquisition activity - a tactic seen as crucial to retaining a presence in the liberalised markets. This study will try to analyse the trends in utility restructuring across the EU markets and how such restructuring has been undertaken. Some aspects of the local situation will also be studied, as to the level of restructuring required, the main barriers to entities restructuring operations in production and distribution, how restructuring will affect staffing and operational costs, and whether it will entail joint ventures or partnerships, or outsourcing of functions, and how the role of the local utility will be affected following the recent enactment of the Malta Resources Authority Act.