The ownership unbundling of electricity transmission system operators: The European Union Policy and the case in Lithuania.

Saule Milciuviene, Agne Tikniute

Research output: Contribution to journalArticle

5 Citations (Scopus)

Abstract

One of the main strategic goals of the European Union is the creation of competitive single electricity market. The effective unbundling of monopole activity of transmission of electricity from competitive activities of supply and generation of electricity is the key element of competitive electricity market. Thus the Commission proposed the model of ownership unbundling of the transmission system operator from supply and generation of electricity. The defining element of an ownership unbundling model is that the network of electricity transmission is operated and owned by one independent company, which clarifies the incentives, responsibilities and liabilities for the network. National strategies on development of electricity markets vary considerably from country to country due to different national constraints. As Lithuania is a member of the European Union, its national energy strategy has to be consistent with the policy of the European Union. Lithuania also has to seek the best strategy to develop electricity market at the national level taking into account its national conditions. Changes in the structure of electricity supply, which will occur because of shutting down of the reactor of the Ignalina Nuclear Power Plant, have prompted the government to review its current energy policy related to development of national and regional electricity market. The objective of the article is to analyze the consistence of recent changes in shareholding of Lithuanian electricity companies with the model of ownership unbundling of the transmission system operator. The first part of the article is devoted to the analysis of ownership unbundling model of the transmission system operator. It discuses (i) existing models of unbundling of the transmission system operator, (ii) the necessity and objectives of ownership unbundling of the transmission system operator, (iii) the main features of ownership unbundling of the transmission system operator, (iv) the main problems and advantages of implementing ownership unbundling of the transmission system operator. The second part of the article analyses the development and changes in the ownership of shares of Lithuanian electricity companies. It discuses (i) the formation of national investor - LEO LT AB; (ii) the specific problems related to the unbundling of supply and generation of electricity from distribution and transmission of electricity. The main conclusion is that that the creation of LEO LT AB is inconsistent with the ownership unbundling model, which is the most favored by European Commission, as future legislative policy of the European electricity market and the best for enhancement of competition in the sector.

Original languageEnglish
Pages (from-to)82-90
Number of pages9
JournalEngineering Economics
Volume2
Issue number62
Publication statusPublished - 2009

Fingerprint

Electricity
European Union
Operator
Lithuania
Ownership
Electricity transmission
Unbundling
Industry
Energy policy
Nuclear power plants
Power markets
Electricity market

ASJC Scopus subject areas

  • Economics and Econometrics
  • Business and International Management
  • Engineering (miscellaneous)

Cite this

The ownership unbundling of electricity transmission system operators : The European Union Policy and the case in Lithuania. / Milciuviene, Saule; Tikniute, Agne.

In: Engineering Economics, Vol. 2, No. 62, 2009, p. 82-90.

Research output: Contribution to journalArticle

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