Structure, Functioning and Regulation of the Spanish Electricity Sector. The Legal Framework and the New Proposals for Reform

Abstract

An electrical system consists of a series of distinct stages: generation, transmission, distribution and supply (merchandising) of electricity services to the end-users. The traditional organisational model assumes, implicitly or explicitly, the extension of a natural monopoly condition from some of these stages to others. This is a consequence of the presumptive existence of strong, vertically-integrated economies. On the other hand, an increasing number of studies have proposed the vertical disintegration of the sector, suggesting that the common ownership of the different stages of the electric sector should be replaced by the introduction of competition wherever possible. These ideas have been developed within the context of a critique of the traditional control structure, characteristic of natural monopolies, which has been emerging in the industrialised world since the 1980’ s. The emphasis has now shifted towards the internal efficiency of the companies involved, and to uncovering those faults in the regulatory system which do not allow the product to be obtained at minimum cost.