NCPA - National Center for Policy Analysis

European Union Moves Toward Electric Power Competition

February 25, 1999

This month, most big electricity consumers in Europe were permitted to choose a power supplier other than their local utility. Eventually, the choice will likely be extended to every consumer in every country, analysts report.

  • So far, only consumers using over 30,000 megawatt hours a year -- typically large industrial users, which account for about one-quarter of demand -- are gaining the legal right to chose their own supplier.
  • France and Italy have not yet passed the enabling legislation necessary for even this limited opening, while Greece, Ireland and Belgium have been given a reprieve by the European Union.
  • Britain privatized power in 1990, while Scandinavian countries have had deregulated markets for years, and Germany and Spain have recently opened their markets.
  • So now nearly two-thirds of the EU market enjoys free choice and lower prices, though such gains will only trickle down to households later.

Spot and futures markets for electricity and gas are already springing up in Europe.

In 1997, electricity prices for households were highest in Denmark and Germany and lower in Greece and Finland. For industrial users, those in Germany, Italy and Austria paid the most, while industries in Finland, Denmark, the Netherlands and Greece saw lower energy bills.

Source: "Power to the People," Economist, February 20, 1999.


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