The electrical transition in Spain: from traditional regulation to market regulation, 1982-1996

Abstract

In the last quarter of the 20th century, economic regulation in the Spanish electricity sector has changed dramatically. Energy policy and the behaviour of utilities companies in Spain should be understood in light of the following contexts: the energy and economic crisis in the 1970s; the political transition towards a democratic regime, and the incorporation of Spain into the European Union. As shown through the aspects analysed in this article, traditional regulation in the Spanish electrical sector did not obtain the desired levels of efficiency. This traditional regulation, which went against competitive regulation put into practice in leading nations, was widely questioned. Any explanation of current regulation deficiencies in the Spanish electricity market, however, should take into account not only the current regulation models but also the “path dependence” in the industrial organization of utilities companies, which historically has been very concentrated in Spain.