Ownership unbuilding and monopoly privileges in electricity transmission
Alexander Filatov1, Mikhail Vasilyev2 & Roman Zaika2
1Far Eastern Federal University, Vladivostok, Russia 2Melentiev Energy Systems Institute SB RAS, Irkutsk, Russia
The paper discusses how ownership unbundling and government-granted monopoly privileges in electricity transmission affect consumer electricity prices. Four cases are considered: government-granted regulated and unregulated transmission monopolies and a sole incumbent transmission company (without monopolistic rights) under and without ownership unbundling conditions. Aprioristic mathematical modeling taking into account potential competition shows that absence of monopoly privileges in electricity transmission can decrease end consumer prices even at high market entry barriers (high costs of new transmission lines). It is shown that ownership unbundling can nearly eliminate the effect of potential competition in transmission.
The research is supported by the RFBR grant №16-06-00071, and the European Union's Seventh Framework Program FP7/07-13/ under REA grant agreement number 609642.