Nov 1998

In a landmark judgment of the Court of Appeal, the legal structure of the electricity industry established in England & Wales in 1990 has come under scrutiny. The case highlights the dichotomy in increasingly deregulated power markets worldwide between private law and the general law of contract in governing commercial arrangements, and the regulatory regime under the auspices of the regulator. Around the world it has been necessary for there to be dual regimes, and the industry has tended in practice to turn to the regulator for guidance. The National Power decision will, coupled with the process of liberalisation, probably go some way to forestalling this practice and focus greater attention on the terms and conditions of contracts. Ian Garrard Curtis Davis Garrard

On the face of it, the argument for electric utilities to enter the telecoms market is irresistible, as they already possess many of the features that should ensure success in this new network business. However, the two industries are actually radically different, and require quite different approaches. If the US is any example, there will also be strong opposition from a wide variety of constituencies, all of which will attempt to game the regulatory process to deter entry. To wit, while telecoms incumbents obviously have no incentive to promote competition, consumer “ombudsmen” on the other end of the political spectrum often believe that electric utilities are unfairly exploiting a strong position that was gained and paid for exclusively by captive customers. Telecoms entry is therefore not a strategy to be entered into lightly. Lawrence J. Spiwak Phoenix Centre for Advanced Legal and Economic Public Policy Studies

There is a battle on in Northern Chile to supply the region with gas and electricity. Two pipelines and a transmission line are being built, but there is insufficient demand to merit the construction of all of these projects. It is widely believed that the first pipeline to be finished will be the overall winner, but the situation is not that simple. A more sensible conclusion could be the merger of the two pipeline projects, rationalising supply of gas to the region. Gillian Bellhouse Wood Mackenzie

The new German Energy Act has been in force since April this year, but competition has been slow to develop so far. New alliances and joint ventures are being formed to exploit the new freedoms that the Law brings, but the structures needed to operate competition are still being built. The question many are asking is whether an electricity exchange can bring the breakthrough? Dr Michael Kraus PricewaterhouseCoopers, Berlin

As electricity markets around the world open up to competition, power marketers are struggling to find ways to make their products distinctive in order to attract customers. Aside from price, one of the few ways to distinguish one power product from another is to specify how the electricity was generated – and to supply the power from “green” sources. By tapping into the environmental conscience of some customers, a sizable niche can be opened up and a recognisable brand created. Dr Gordon Edge Editor