Liberalizing the gas industry Take or pay contracts retail…自由化天然气行业采取或支付零售合同.pdfVIP

Liberalizing the Gas Industry: Take-or-Pay Contracts, Retail Competition and Wholesale Trade Michele Polo (Bocconi University and IEFE) Carlo Scarpa (University of Brescia) IEFE – Workshop on Energy Markets 18 May 2012 Motivation • The liberalization of the natural gas industry is a hot topic in the European policy agenda • Until recently, focus on the security of supply and the problem of access to transport infrastructures (upstream segments) • Competition downstream and the development of wholesale markets are emerging themes • We argue that, contrary to the electricity market, there is not, so far, a common view on how competition works in the gas market • We analyze entry and competition in the downstream segments (retail) once (assuming) the access problems is solved. • Policy issue: Are we sure that ensuring Third Party Access (TPA) to infrastructure is sufficient to obtain competition in the downstream market? 2 Long term contracts and TOP • The upstream segment is still dominated by long term contracts with: – Take-or-pay quantity obligations + upward flexibility – Price indexed to oil • Italy: • 2005-2008: total demand slightly above production + TOP obligations, and below production + TOP + upward flexibility • 2009-2011: total demand below production + TOP obligations • Even before the crisis, TOP obligations cover most of the demand • How TOP contracts affect downstream competition? 3 Three features of the gas industry • Three key features of the gas industry after liberalization