Capacity release, asymmetric regulation and competition in energy markets

Regulators or competition commission could adopt capacity release to increase competition in electricity and gas markets and to secure part of competitors´supplies. These policies, that we could define as asymmetric regulations, have been decided in France, Italy, Great-Britain, Spain, etc... These regulatory policies force the incumbent to release part of its capacity of supply to competitors to enhance competition. So, regulators have to choose the amount of released capacities and the associated price. They could effectively improve competition because they give a capacity access to competitors. However, according to heavy investments in infrastructures, stranded costs emerge. Thus, policy makers have to suit their policies to maximize the welfare and to reduce losses.