DTe Wishes to Promote the Development of the Electricity Market
The Office for Energy Regulation (DTe) is considering possibilities for promoting trade on the electricity market in the Netherlands, following research carried out by the Market Surveillance Committee (MSC). This research concluded that the degree to which electricity is tradable on the electricity market in the Netherlands is falling. This is an obstacle to the development of competition on this market.
According to MSC, the electricity market is insufficiently liquid. A liquid market is characterised by the presence of a large number of traders and good tradability of electricity. The fall in liquidity is caused, for instance, by several mergers between a number of European electricity generators and suppliers. A large number of American players and new entrants have left the Dutch market in the wake of the Enron debacle. Due to the lack of liquidity, it has become more difficult for independent players to maintain their position on the market. This may have a negative affect on competition. MSC also points to the danger of a decrease in price transparency, as a result of which players will not be in a position to monitor (price) trends adequately and newcomers will be more cautious about entering the electricity market. The opportunities for traders to trade with each other will also be limited because electricity exchanges in Western Europe are open at different times. These developments not only affect the emergence of reliable electricity prices, but also the extent to which the electricity market in the Netherlands can develop into a fully-fledged competitive market through the process of liberalisation.
To obtain insight into the opportunities for promoting trade on the electricity market, DTe has analysed the development of the electricity market in the Netherlands and neighbouring countries. In this regard, DTe will also carry out research into the possibilities for improving the structure of the market. DTe expects to publish the results of this research after the summer.
MSC is an independent advisory committee of NMa and DTe. MSC analyses the operation of the liberalised electricity market in the Netherlands and advises NMa and DTe (on request and of its own accord) with regard to improving the operation of market forces. MSC based its analysis partly on material from a survey on the electricity market in the Netherlands.
The MSC report on the liquidity of the Dutch electricity market can be obtained from NMas website.