Pricing, competition and regulatory distortions - Are legalized drugs the future?
Presentation by Lars Kjølbye given at the CREG Annual Conference on the 28th of September.
Published on: Mar 4, 2016
Transcripts - Pricing, competition and regulatory distortions - Are legalized drugs the future?
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CREG Annual Conference
Pricing, competition and regulatory
distortions – Are legalized drugs the future?
Brussels, 28 September 2015
Paying the price of regulatory failure?
Household and Industry electricity price developments
• Pervasive price regulation is not the answer to high
retail prices and other consequences of policy
• Price regulation risks distorting investment signals (new
generation, networks, energy efficiency)
• Price regulation risks foreclosing competition when prices are
set below cost of competing technologies
• Letting competitors share in low cost production turns them into
resellers rather than competitors
• The end result: everyone on the drug?
• Consumers: price regulation
• Enterprises: subsidies and price regulation
• Producers: subsidies (renewables, capacity mechanisms, new
• In the end someone has to pay the bill
Distortion + distortion = distortion
• Drug prescription is subject to EU law controls
• State aid control
• Control of state measures (e.g. Articles 106 and 102 TFEU
• Internal Energy Market rules (Federutility)
• General economic interest
• Proportionality including limitation in time
• Clearly defined, transparent, non-discriminatory and verifiable,
equal access for EU suppliers to consumers
Price regulation and the public interest
• Public interest justification: why should energy prices
in a Member State be the same?
• The cost of housing differs widely from one geographic
location to another
• Pricing that reflects supply and demand sends
essential pricing signals regarding investment
decisions (networks and supply)
• In Swedish Interconnectors the Commission
intervened against practices that interfered with the
free flow of electricity to maintain price uniformity
Price regulation and territorial cohesion
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