This paper outlines four issues common to electricity market reform around the world: 1) models of competition, 2) market design, 3) regulation of competition and transmission, and 4) energy policy issues. Several areas of emerging consensus about these issues are summarized. Many governments believe that the full benefits of competition are obtained when full, or retail, competition is introduced. Markets allowing bilateral dispatch alongside spot markets appear to have won out over mandatory pools. Markets are critically dependent on the transmission network, and governments are finding that independent system operation with regulated access and pricing are the strongest means to ensure fair, efficient use of the network. Cross-border trade needs a strong centralized mechanism to clear up disputes, as well as a degree of rule harmonization among states. Regulators must be able to ensure adequate competition both at a state level and between states. The paper concludes with an outline of current developments in electricity market reform in the European Union.
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