Completely false. In many jurisdictions States Transmission and Distribution are deemed to be ‘public services’ and must be owned by public entities. Step forward, France!

So how do you see consolidation happening in that scenario? France merges with Belgium???
What is important to consolidate is not the ownership of the wires, just the operation (access control, dispatching, information flows).

Who owns the wires is irrelevant for competition -unfortunately- you seem to exhibit the same biases as the Commission on this issue.

2° how do you explain that you professors in French universities are paid by the French State and that you receive research grants on pulic funds? I think it would be better that the market proves istelf its superiority without a State intervention?

3° You pretend you are independant scholars, but you are not since you receive funds from the European Commission and from electric firms members of the electric oligopoly.

3° You make a confusion between a very competitive market (perfect competition) and oligopolies. Olgopolies are not competitive and are not good for the consumers. As would say the economists they are not pareto-optimal

Although all the economic arguments on full ownership unbundling may be there, there is a risk that the debate will take more energy than we will gain. In the heated Dutch debate over the last 3 years about full network ownership unbundling there was almost a full stand-still on discussing any other policy issue in energy. But more importantly, I would fear that the rational discussion on the industry structure will be bypassed by the emotional discussion on ownerships. We generally do not trust private ownership to run our networks (as we probably do not give full trust to our regulators and their regulatory system; as a former one I am speaking from experience). And, in addition, we would distrust foreign state-owned companies even more…..
Yes, a golden triangle (market integration, network cooperation and europeanisation of regulations) requires a balance. And this balance-seeking should govern the discussion, including to take a closer look at ISO-type of arrangements.

Yes the discussion and the arguments tend to focus on electricity and although in theory there is no reason to treat gas differently, the EU-reality is there. As we will not have (anymore, like f.i. the US) an EU-only gas supply system, we will have to organise our supplies more and more on the basis of long-haul pipeline-based infrastructures. Large new ones will have to be build and filled requiring a complicated coordination mechanism throughout the whole value-chain in order to manage and share the huge risks involved. It is very unclear if and how the exemptions to the unbundling proposals and to the new infrastructures will give the appropriate answers. We would need more creativity in the discussion and try to manage the right balance on the “Madrid-Moscow axis” seeking an effective EU market design in harmony with a reliable supply security system.

Come on Jean-Michel and Francois, and others, let’s think the golden power triangle and let’s think gas, showing our DGTREN & DGCOMP-friends with their Florence and Madrid-gangs some ideas on how to secure competitive EU markets with reliable external supply security.

As it appears within the document and in the categoy of the blog, it is only dedicated to electricity and all arguments are built on that sector. It could have been more apparent in the document that for gas the balance between pluses and minuses is from far not the same.
I remind that the economy and operation of the gas sector, particularly in continel Europe, is completely different than electricity one. For example, the production actors have a totally different positionning and therefore the assets repartition of the “integrated” gas groups has nothing to do with those acting in electricity.
In addition, in gas operation with a daily balancing of networks, a TSO has no influence on production priority and therefore no influence on the competitivity and margin of such or such stakeholder.

Gas industry can’t be seen only as a financial field. Stocks markets are generally said to be the most efficient to arbitrate; unfortunately they are also sometimes sheeplike, and blind until the market breakdown would arrive ; it can be dangerous to let them, at the end, the only entities in a position to arbitrate risks.

One of the argument of the paper for ownership unbundling is to eliminate a potential danger and your paper anticipate that, perhaps, one day, the regulator could be less effective or the chairman of EDF more intrusive …. It reminds me the Spielberg’s movie “Minority report” : people are arrested before they commit the crime the police anticipate they will commit . Very effective indeed. More seriously, that kind of argument are not constructive , it is more or less a lazy argument who avoids to think to true industrial questions.

Finally, I am not convinced that ownership unbundling would participate to consolidation and Europeanization of the transmission networks. If the result is that the MS are owners of the networks, as it is already in a significant proportion of the country who have choosen to unbundle, it would be not in favour of that process except to give the opportunity to the largest current network operator in Europe to buy a patchwork of network pieces.

Georges LIENS

PS : just a small addition concerning the comment of JD. Makholm
I am not sure that “one size fit all” and the competitivity of the US gas market and of some other markets is firstly correlated to a significant domestic production and not only with the structuration of the industry.

But there is another, perhaps stronger, benefit in ownership unbundling–the collective action of the new arms-length parties: the network owners and major network users. Those economists who witnessed the greatest ownership unbundling of all–the Congressionally-mandated, Securities and Exchange Commission-managed, 1935 breakup of the US utility holding companies–could see the powerful effect creating independent, sophisticated, and well-funded actors who often-enough had adverse interests. It led directly to the creation of an independent interstate gas network in the US; the country’s most competitive and efficient.

The absence of adverseness has been the bane of the other US energy networks–electricity transmission and oil pipelines. When it comes to the pursuit of efficient, flexible and competitive networks that are owned by powerful and longstanding vertically integrated firms, regulators too often bring a knife to a gunfight. No so with the collective action of the independent network users that ownership unbundling creates.

Those economists who saw that grand ownership unbundling (JR Commons, MG Glaeser, E Troxel and JC Bonbright, among others–all long dead) would argue, as would I, that ownership unbundling belongs in the first category of actions to make progress toward competitive, secure, flexible and integrated EU energy markets.

Jeff D. Makholm