European Energy Regulators: An Empirical Analysis of Legal Competences

Abstract

This paper examines empirically whether differences in legal competences of National Regulatory Authorities (NRAs) of European gas and electricity markets are rationally aligned to the corresponding countries’ divergent levels of 1) security, 2) competitiveness, and 3) carbon-neutrality of energy supply. Scores are derived (a) on the extent to which these energy supply characteristics are realized and (b) on how many competences NRAs have regarding these policy objectives. Although higher energy scores should reduce the need for regulatory intervention and thus legal competences, it appears that this does not hold for most policy objectives. In fact, gas and electricity market unbundling and/or liberalization imply higher degrees of regulatory intervention. Finally, the legal competences do not completely follow the 'optimal' competence arrangement for regulatory authorities; compared to a theoretical benchmark there are relatively more 'tough' than 'soft' competences, while the latter are less costly to exercise. These potential regulatory 'mismatches' could be corrected by adjusting the number and intrusiveness of the NRAs' legal powers.

Keywords: energy markets, National Regulatory Authorities, legal competences, multilevel analysis, security of supply, carbon-neutrality, competitiveness

JEL Classification: C23, H11, L43, L51, L94, L95, Q48