the difficulty to behave as a (regulated) natural ......(ntpa). the negotiations about the economic...

The Difficulty to Behave as a (regulated) Natural Monopolist –

The Dynamics of Electricity Network Access Charges in Germany 2002 to 2005

by

Thomas Wein

and

Heike Wetzel

March 06

Prof. Dr. Thomas Wein University of Lueneburg Institute for Economics PO Box 2440 D-21314 Lueneburg Germany ++49/+4131/6772302 (phone) ++49/+4131/6772026 (Fax) Dipl. Kffr. Heike Wetzel University of Lueneburg Institute for Economics PO Box 2440 D-21314 Lueneburg Germany ++49/+4131/6772324 (phone) ++49/+4131/6772026 (Fax)

ii

The Difficulty to Behave as a (regulated) Natural Monopolist –

The Dynamics of Electricity Network Access Charges in Germany 2002 to 2005

by

Thomas Wein

and

Heike Wetzel

University of Lueneburg

March 06

Abstract

The German legislator gave access to the electricity grids by Negotiated Third Party Access (NTPA).

The present valid association agreement has created an obligation to calculate network access charges

for the first time for all network operators in Germany. The analysis of access charges since 2002 re-

veals a lot variation: continuously decreasing (increasing) prices as well as discontinuously price

changes. While this turbulence can not be explained by NTPA several other reasons can be relevant:

different calculation abilities, adjustment due to publishing obligation or strategically use of structural

characteristics. Multivariate estimations based on data covering 2002-2005 will test these hypotheses.

Key words: deregulation, natural monopoly, power industry

JEL-Classification: D42, L43, L94

1

1 The Problem

Until the beginning of deregulation in 1998 the German electricity utilities had had no reason to calcu-

late network access charges. Competition had not occurred and retail prices for private households and

small businesses had been regulated. By implementing the EU electricity directive (96/92/EC) in 1998

the German legislator opened the German electricity market for all customers irrespective of size or

commercial status and chose to give access to electricity grids by Negotiated Third Party Access

(NTPA). The negotiations about the economic rules for access were the crucial points of NTPA. The

network owners and users which were represented by several associations bargained more than two

and half years to develop a contractual framework for the network access (association agreement). At

the end of 2001 the final association agreement, the so called VV II+, has been adopted. It has created

an obligation to calculate network access charges systematically for the first time for all nine hundred

network operators in Germany and is still valid today.

Applying economic theory it can be shown that energy network operators are non-contestable natural

monopolists. The German electricity market can be split up into the sections generation, transmission

networks, distribution networks and retail (cp. Growitsch/Wein 2004). The national grid or transmis-

sion networks – in Germany an amalgamation of four combined sub-networks (regional closed loop

controls, Rege lzonen) - is defined as the network of extra high voltage level (220/380 kV). It is used

to transmit electricity from the generation plants to the interconnection sites, which link the national

grid to regional distribution networks. Regional and local distribution is based on high, medium and

low voltage level networks (110, 20, and 0.4 kV). Transmission and distribution networks are good

examples for stages with subadditive cost functions: Density and stochastic scale advantages make it

necessary to have only one network supplier (natural monopoly). Because of the existence of enor-

mous sunk costs potential competition can not work; non contestable natural monopolies are given

(cp. Brunekreeft 2002, Growitsch/Wein 2004). In contrast to that, if non discriminatory access to both

networks stages is provided, the generation and retail sections can be seen as stages in which competi-

tion is possible .

2

Although the NTPA and especially the association agreements should prevent the network operators to

levy monopoly prices since the end of 2001 the analysis of the access charges shows a lot variation

after this point in time. Table 1 represents the comparison of access charges from October 2002 to

May 2005. Whereas more than one third of all low and medium voltage network owners have not

changed their access charges, the other two thirds have risen or have lowered their prices. Looking on

the high voltage sector sixty percent of the firms levy charges which are higher in 2005; less than

thirty percent are working with the same prices. The prices are given for a huge part of all German

operators because not more than round about 900 operators exist and the most of them have no high

voltage grids.

Table 1: Development of Network Access Charges – 10/2002 to 05/2005

Low voltage Medium voltage High voltage

%

Increasing 26.5 33.2 60.0

Remaining constant 36.6 39.0 28.9

Decreasing 36.9 27.8 11.1

N: 681 641 45

Source: Deregulated German electricity market data set 2006; see chapter 4.

A closer look to the published charges shows that several operators have changed their prices “in all

directions”. During October 2002 and May 2005 we find firms for example which have started with a

high price, then have levied a lower price, and then came back to a high price level. Such a network

operator would be assigned to “remaining constant” in table 1. To cla rify such pricing behaviour we

calculate the new variable “disquietness”. “Disquietness” represents the average quadratic divergence

of access charges:

....)()( 2

112

sdifferencequadraticofnumbervaluevaluevaluevalue

ssdisquietne tttt +−+−= ++

3

Hypothetical, but characteristic prices of two low voltages operators are given in table 2. Both firms

would be registered in table 1 as price increasing firms. But firm 2 has changed its prices more often

than firm 1. Hence, the pricing behaviour of firm 2 is much more turbulent than firm 1.

Table 2: Disquietness – two example firms

10/2002 03/2003 10/2003 04/2004 10/2004 04/2005 disquietness

Firm 1 5,91 5,91 5,91 5,91 5,91 6,01 0,002

Firm 2 5,91 5,81 5,81 5,85 5,91 6,01 0,00504

Source: Hypothetical firms; own calculation.

Calculating disquietness for all voltage levels and excluding all firms with the same access charges at

starting and end time we get table 3. The descriptive values definitely show that firms with decreasing

prices change their prices more often than firms with increasing prices and price changes are more

important on the low voltage level, less on the medium voltage and nearly unimportant on the high

voltage level. This result is given by the average and median values, but is not in all cases supported

by the standard deviation.

Table 3: Descriptive Values of „Disquietness“ Low voltage Medium voltage High voltage

Only decreasing

Average 0.222 0.114 0.054

Median 0.058 0.024 0.060

Standard deviation 0.673 0.410 0.050

N: 254 220 5

Only increasing

Average 0.086 0.063 0.010

Median 0.022 0.012 0.010

Standard deviation 0.173 0.216 0.014

N: 180 178 27

Source: Deregulated German electricity market data set 2006; see chapter 4.

4

Disquietness or turbulence in price setting behaviour seems astonishing since from the economic view

point grid operators are non contestable natural monopolists which are regulated by NTPA, established

at the end of 2001. Therefore, we should expect either regulated average cost prices if NTPA is work-

ing or monopoly prices if NTPA is ineffective. Further on, because the most cost elements of networks

are long run costs there are very few arguments to increase prices beyond the starting point of regula-

tion. Nevertheless, the results displayed in table 1 and 3 indicate dramatically that in the German elec-

tricity market such a stable equilibrium was failed: Very often prices were altered beyond the starting

point. Why?

This paper compiles the arguments why in many cases the German network operators have not found

the optimal price in 2002. The paper is organized as follows. Section 2 gives a short overview on the

German history of NTPA and associations´ agreements. Industrial organization theory provides theo-

retical explanations for price changing behaviour (section 3). Data, empirical hypothesis and method-

ology are presented in section 4. Section 5 contains further descriptive analysis. Multivariate estima-

tions results on the significance and relevance of reasons for price changing behaviour are discussed in

section 6. Finally, we summarize our results and try to analyze whether NTPA has encouraged price

changes (section 7).

2 A Short History of NTPA and Associations ` Agreements

Until April 1998 the German electricity market was characterized by regional operating monopolies:

Customers were forced to buy power from one local monopolist; the energy firms agreed that no firm

would try to enter the market of another firm (cp. Deregulierungskommission 1991). Satisfying Euro-

pean obligations the German legislator has opened the electricity market for all customers in April

1998 Market opening had been done by choosing the option of negotiated third party access (NTPA),

which implies a strong priority for private negotiations between network owners and users. To facili-

tate the access to the grids the associations of both parties settled several agreements until the end of

5

2001. The last agreement, the so called VV II+, is still relevant at the beginning of 2006 even tough

NTPA was legally disposed in July 2005. In addition to NTPA the German cartel offices (Bundeskar-

tellamt and Landeskartellamt) have the possibility to control network access ex post, especially to

secure non-discriminatory access. Consequently, Meran and von Hirschhausen (2004, 1) have de-

scribed the German way of energy regulation as “cartel type, private contracts negotiated between the

main domestic players in the industry, accompanied by weak ex-post control exercised by anti-

monopoly agency”. Table 4 describes the regulation framework and chronological sequence of de-

regulation in detail.

6

Table 4: NTPA in Germany

Date Brief Description

Content Actors

4/24/98 Reform of energy law Legally opening of electricity and gas markets for all customers; negotiated third party access (law on electricity and gas supply;

EnWG) Federal legislator

5/28/98 Association agreement I

(Verbändevereinbarung I; VV I)

Access charges, calculated on the principle of contractual path -> distance based rates

Network users: German Business Association (BDI), Association of large industrial electricity consumers /VIK)

Network owner: Association of electricity economy (VdEW) 5/28/98-12/31/99 Validity period of VV I

1/1/99 Reform of competition law Abolishing of competition rule exemptions, introduction of free access to essential facilities

Federal legislator

12/13/99 Association agreement II

(Verbändevereinbarung II; VV II)

Access charges based of connection points; two geographical zones

Network users: see above Network owner: see above

1/1/00-12/31/01 Validity period of VV II

12/13/01 Association agreement II+ (Verbändevereinbarung II

plus; VV II+)

General terms of contracts, principles of the calculation of access charges

market comparison scheme

Network users: see above Network owners: see above + Association of grid operators (VDN); association of regional distribution utilities (ARE),

association of municipal distribution utilities (VkU) Moderator: Task force of Federal M inistry of Economics

1/1/02-12/31/03 First validity period of VV II+

05/23/03 VV II+ = general code of

practice

1. amendment to EnWG: VV II+ accepted by law as the general code of practice without constraining the regulatory power of

cartel offices Federal Legislator

03/20/03 Acceptance of Regulation authority

Instruction of monitoring report, agreement on RTPA, further development of association agreement

Federal Government

06/26/03 Cancellation of NTPA European Union: Duty to introduce regulation authority in all member states; “German way of regulation” has to be finished

until 07/01/2004 European legislator

8/31/03 Publishing of Monitoring Report Federal Ministry of Economics 1/1/03-07/12/05 Second validity period of VV II+

07/13/05 RTPA

(regulated third party access

2 amendment to EnWG: Introduction of regulation authorities (federal network agency and federal states regulation agencies);

introduction of legal rules; preparing of incentive regulation Federal Legislator

07/14/05 VVII+ as important background for decisions of federal network agency Sources: Glachant/Dubois/Perez 2004, Monitoring report 2003, Federal Ministry of Economic Affairs 2006a/2006b, Federal Network Agency 2006.

7

3. Theoretical Background

The main aspects of the still valid association agreement (VV II+) in combination with the ex-post

control of the German cartel offices are the securing of non-discriminatory network access and the

prevention of monopoly network access charges. Considering the very complex market structure, in-

cluding various cost relevant interconnections between the non-contestable and potential competitive

production stages, the determination of an adequate pricing rule for network access charges is a rather

sophisticated task. Whereas economic theory offers a variety of different pricing rules (for example

(long run) average incremental cost prices, efficient component price rules or Ramsey-prices (Bau-

mol/Sidak 1994; Sidak/Spulber 1997, pp. 403-426), it can not give a definite answer. NTPA as one

possible solution to this problem seems to be not appropriate. The observed price turbulence and dif-

ferences in the price setting behaviour show that a stable equilibrium with prices equalling long run

average costs was failed. Various reasons can be responsible for that failure.

First of all, it can be assumed that the so called regulatory threat, which refers to the power of the car-

tel offices to control the access charges (Brunekreeft 2001/2002) , has an influence on the price settling

differences. The behaviour of the large regional network operators is assumed to be under more public

surveillance and hence under a more intense control of the cartel offices than the behaviour of the

much smaller municipal utilities. Therefore, the regional operators could have decreased their access

charges more than the municipal utilities. On the other hand regulatory threat could have become inef-

fective towards the end of NTPA. The description of NTPA history revealed that the end of NTPA

was already foreseeable during 2003. Hence, the incentive to decrease prices became weaker after

spring 2003. Additionally, it might be possible that operators were willing to raise charges because of

expecting inoperativeness of NTPA.

A second reason for price setting turbulence could be that in the pre-deregulation period access charge

calculation had not been necessary. It is conceivable that the calculation knowledge has been unevenly

distributed. Large integrated firms which are active on several markets and sections have better

knowledge than small firms operating only in one local market. In other words: Integrated firms are

8

more experienced with optimal price calculation and would seldom change prices. Hence, for these

firms almost constant charges are assumed

Another possible explanation could be the strategically use of structural characteristics. At the end of

2001 a market comparison scheme has been introduced as part of the final association agreement. It

developed three so called structural features (“Strukturmerkmale”) which were intended to account for

differences in the networks. Network suppliers which

• are located in East Germany,

• can be characterised by low possibilities to secure economies of scale (low population or con-

sumption density), or

• are obligated to bear additional social costs (high cable rates because of ecological or aesthetical

reasons)

have got the “right” to levy higher access charges by the institutional rules of the market comparison

scheme. If firms which had fulfilled these features recognized that they are charging lower access

charges than they are allowed to, they were invited to mark up their fees (cp. Wein 2005).

Finally, the obligation to publish specific access charges and structural features - also introduced with

the comparison scheme - might have had an influence on the price setting behaviour as well. Firms

which had charged low access charges were informed that they were able to increase prices without

being afraid of regulation (see Growitsch/Wein 2005). On the other hand, expensive firms – especially

charging access charges within the upper 30% within a structural class - were informed that they

should fear regulation. The effect should be a price reduction of expensive operators and a price in-

crease of cheap operators.

Recapitulating, several theoretical arguments can be enumerated why price changes could have oc-

curred in both directions :

• The asymmetric influence of regulatory threat which can depend on the expected end time of

NTPA or on firm size.

9

• The experience with price calculation, which could be more important in case of vertically inte-

grated firms.

• The introduction of structural features which could work as an invitation to increase charges if an

operator belonged to a “high cost” structural feature.

• The publishing of access charges which disclosed a too expensive or too cheap operator.

Empirical tests are necessary for confirmation.

4. Data, Hypothesis, and Methodology

The market comparison scheme which was constituted by the last association agreement at the end of

2001 introduced the duty to publish network access charges for all network operators. The German

association of electricity network operators collected and published the data of all its member firms

which were active in low, medium or high voltage (cp. VDN 2006). Altogether the access charges are

available for:

• October 2002,

• March 2003,

• October 2003,

• April 2004,

• October 2004, and

• April 2005.

Access charges at the low voltage networks were differentially registered for customers with and

without power metering, and at the medium and high voltage networks for customers with power me-

tering only. All published charges were calculated in terms of characteristic consumption classes, for

example for low voltage without power metering between 1 700, 3 500 and 30 000 kWh/a, and for

medium voltage between 1 600, 2 500 and 5 000 utilization h/a (cp. Katzfey et al. 2002). Furthermore,

the arithmetic mean values of all firm-specific characteristic consumption classes were published,

separated for the low, medium and high voltage networks.

10

If the firm has no high voltage network its degree of vertical integration is low. If at none point in time

reported by VDN an access charge for high voltage had been published we can assume this firm being

not active in high voltage network; a lower vertical integration is given. Firms are named as regional

suppliers if they are working in more than one municipality with more than 40 000 inhabitants, ener-

gizing an area more than 200 sqkm. Regional suppliers are (partly) owned by one of the four big

power players in Germany (RWE, EnBW, Eon, or Vatenfall). Table 5 shows the distribution of both

variables.

Table 5: Regional Suppliers and High voltage activities Active in high voltage sections?

No Yes All No 620 36 656 Yes 41 17 58

Regional suppli-ers?

All 661 53 714

Additionally, according to the market comparison scheme the following structural features are re-

ported by VDN:

• Structural feature number 1 measures the regional intensity of demand. Regarding the low voltage

network the population density (inhabitants per km2) is used. Low population density (D) means

below 2500 inh./sqkm, medium until 3500 inh./sqkm and high above 3500 inh./sqkm). To avoid

contortions, areas without low voltage supply (forests, lakes, etc.) are not included. The consump-

tion density (MWh/km2) takes the current flows in medium and high voltage networks in relation

to the whole area of the network into account. This feature is applied to the whole area as unpopu-

lated territories in these networks cannot be excluded technically. Consumption density in me-

dium/high voltage (D) is classified as low if MWh/sqkm are below 500, medium until 1700

MWh/sqkm, and high above 1700 MWh/sqkm.

• The second structural feature “cable rate” (CR) measures the cable length in comparison to the

whole length of the respective network´s conductions. This structural feature is supposed to repre-

sent the fact that network operators are frequently obliged (for aesthetical and environmental rea-

sons) to use underground lines. The associations agreed on three classes of CR: Low (CR = 50 %),

medium (50 % < CR = 75 %), and high (CR > 75 %).

11

• The third structural feature includes the fragmentation of network suppliers due to their service

areas: East- and West-Germany (East? Yes =1, else = 0). This variable represents the considera-

tion that oversized networks have been established in East Germany after 1989. The over-sizing

effects are the result of not forecasting the diminishing peak load quantity (by 70 %) after the re-

unification (stranded costs).

Therefore, 18 structural categories (3 x 3 x 2) can be established. All structural categories are based on

April 2005 because there is only very small variance during our considered period and in April 2005

almost all operators had reported their structural variables to VDN (cp. VDN 2006). The number of

firms in the structural categories is reported by table 6.

Table 6: Distribution of structural categories low voltage (n: 687) medium voltage (n: 649) high voltage (n: 60)

population density consumption density

low medium high low medium high low medium high

%

1st structural

feature

29.7 30.3 40.0 14.9 31.2 53.9 10.0 31.7 58.3

cable rate

low medium high low medium high low medium high

n

2nd structural

feature

5.7 11.9 82.1 8.5 14.6 76.9 60.9 9.6 29.5

West Germany: 582 firms (81,4 %) 3rd structural

feature East Germany: 133 firms (18,6)

Further on, the market comparison scheme stipulated a process to sue expensive suppliers at an arbi-

trative board. Firstly, suppliers were defined as expensive if their access charges were higher than the

upper 30 % which could be identified per all 18 structural categories. Secondly, at the request of a

network user the arbitrative board had the right to examine whether such an expensive supplier had

taken reasonable access charges. The criteria “reasonable” could be implemented by using price calcu-

lation guidelines which were already applied during the regulation before 1999. Hence, operators

which were charging more than the 70 %-mark were under suspicion to be an expensive firm and had

to fear an arbitrative board proceeding.

12

We have decided to classify network operators as cheap if the firm specific access charges are lower

than 30 %. This frontier can not be explained by institutional rules it only is an analogy to the 70 %-

mark mentioned above.

Table 7 shows that several points in time can be compared. For example, the influence after half o year

can be analyzed five times, the influence of two and half years once.

Table 7: The possible influence of time

0,5 year 1 year affect on

1,5 years 2 years

2,5 years

10/02 A

03/03 B

10/03 C

04/04 D

10/04 E

04/05 F

10/02 A - B-A C-A D-A E-A F-A

03/03 B - C-B D-B E-B F-B

10/03 C - D-C E-C F-C

04/04 D - E-D F-D

10/04 E - F-E

Base point in time (starting point for

cheap and expensive)

04/05 F -

Because we would like to measure price changes as consequences of our variable we must introduce

the growth rate of access charges:

access ch e access ch eaccess ch e

t t

t

arg argarg

.−

⋅−

−

1

1100

According to the theoretical background we would anticipate a negative growth rate if the firms could

expect the end of NTPA/the beginning of RTPA. Chapter 2 shows that in 2003 the probability for a

negative growth rate is higher than in 2004/05. East German networks should also have a positive

growth rate because the market comparison scheme could work like an invitation to increase prices. In

case of increasing density it is difficult to justify higher prices. Hence, those firms have an incentive to

13

diminish access charges the growth rate should be negative. High cable rates are an argument to have

higher costs and therefore to increase prices. If any firm was expensive in t-1, he must fear more than

other regulatory threat, hence he will decrease prices. The other way round: A positive growth rate

should be given if the firm levied low prices in t-1. Further on, regional supplies should have negative

growth rates because of being more affected by regulatory threat. Regional suppliers and/or vertically

integrated operators could have more abilities to calculate access charges than disintegrated/municipal

utilities. Hence, we would expect a negative growth rate for the first ones. Table 8 summarizes our

hypotheses.

Table 8: Explaining variables and hypothesis

Growth rate

Long “life” time for NTPA expected? -

East Germany? +

Higher density -

Higher cable rate +

Expensive in t-1? -

Cheap in t-1? +

Integrated? (Active in high voltage?) -

Regional supplier? -

After the presentation of descriptive values we will show the results of multivariate estimations. Be-

cause the growth rates which are used as left hand variables can range from -8 to +8, the Ordinary-

Least-Square-(OLS-)-method is suitable (cp. Gujarati 1995 or Hill/-Griffiths/Judge 1997). We are

carrying out normality tests after Jarque-Bera and homoscedasticity-tests after White to check for im-

portant assumptions of the OLS-Method (cp. Greene 1997, Gujarati 1995, and Kawakatsu 1998). The

used statistical software package is EViews 5.1.

14

5. Descriptive Analysis

Table 9 displays descriptive information on the access charges for the low, medium and high voltage

level. Since a descriptive analysis of all published access charges would extremely expend this paper,

the arithmetic mean values are represented only. First of all it is shown that access charges decrease

from the low voltage to the high voltage level. The mean values in low and medium voltage were

lower in March 2003 than in October 2002, after March 2003 they almost remain stable. The mean

values for the high voltage level have systematically increased since the first period. Regarding the

variance it is obvious that between October 2002 and March 2003 the standard deviation declined for

the low and medium voltage level, but not for the high voltage level. The observed changes of the

minimum and maximum values should be carefully interpreted since in the first periods not all Ger-

man operators disclosed their access charges. In contrast to a rather slight change of the access charges

from October 2002 to March 2003 within the ‘cheap’-mark (30%-mark), the values within the ‘expen-

sive'-mark (70%-mark) show a dramatic change for the same period. Altogether, the descriptive analy-

sis indicates that the period from October 2002 to March 2003 is very interesting, first of all for the

low and medium voltage level.

15

Table 9: Descriptive information of arithmetic mean values

1 charges without metering, chp (combined heat and power cycle) shares, mark up for synthetic load profile, and concession fees.

Mean Median Standard deviation Minimum Maximum 30 %-mark 70 %-mark n ct/KWh1 10/02 5.55 5.49 0.64 2.87 8.15 5.17 5.85 484 03/03 5.49 5.40 0.58 4.11 7.67 5.15 5.77 506 10/03 5.47 5.39 0.58 3.11 7.77 5.15 5.71 660 04/04 5.47 5.38 0.57 3.11 7.77 5.15 5.71 666 10/04 5.46 5.39 0.57 3.10 7.80 5.15 5.71 669 lo

w v

olta

ge

04/05 5.47 5.40 0.58 3.11 7.77 5.16 5.69 676 ct/KWh1 10/02 2.80 2.73 0.46 1.54 5.11 2.52 3.00 467 03/03 2.76 2.70 0.38 1.93 4.28 2.52 2.96 482 10/03 2.74 2.68 0.37 1.93 4.28 2.52 2.92 623 04/04 2.74 2.68 0.37 1.93 4.28 2.52 2.92 627 10/04 2.75 2.69 0.35 1.93 4.28 2.52 2.92 629 m

ediu

m v

olta

ge

04/05 2.76 2.70 0.38 1.93 5.54 2.53 2.93 636 ct/KWh1 10/02 1.23 1.18 0.18 0.88 1.70 1.11 1.32 44 03/03 1.22 1.20 0.16 0.88 1.59 1.12 1.29 41 10/03 1.24 1.21 0.15 0.98 1.59 1.14 1.31 40 04/04 1.26 1.25 0.17 0.98 1.83 1.16 1.34 37 10/04 1.27 1.26 0.17 0.98 1.83 1.18 1.34 38 hi

gh v

olta

ge

04/05 1.30 1.27 0.18 0.98 1.91 1.19 1.35 38

16

Table 10 shows the growth rates of access charges depending on time perspective and voltage level.

The shares of firms either increasing or decreasing prices are given by percentage values. To display

the effect of different starting points the time perspectives beginning in October 2002, March 2003,

and October 2003 are shaded. Considering the very long run perspective (2.5 years) we are able to

evaluate the total effect. Almost one half of the low and medium voltage firms have decreased their

access charges, but nearly ¾ of the high voltage firms are charging higher prices. These trends are

naturally observable within the other time perspective with base October 2002. If we take additionally

into account different final periods the last point in time, May 2005, seems to be important: The shares

of price changing behaviour are important between one and two years ago. Independent of these ef-

fects the shares show a huge extent of price changing behaviour which could be explained economet-

rically.

Table 10: Growth rates of arithmetic mean values

* number of observations.

Low voltage Medium voltage High voltage - + - + - +

% n*:

% n:

% n*:

Very long run perspective (2.5 years) 4/05 to 10/02 48.3 13.8 453 45.2 14.0 434 13,8 72.4 29 Long run perspective (2 years) 4/05 to 03/03 22.5 28.6 497 18.9 26.7 472 5.9 50.0 34 10/04 to 10/02 48.4 30.6 448 45.6 32.1 430 20.9 60.0 26 Medium run perspective (1.5 years) 4/05 to 10/03 46.2 24.1 448 24.8 17.2 430 29.0 58.6 29 10/04 to 03/03 20.1 18.7 497 7.8 7.6 474 8.8 26.5 34 4/04 to 10/02 46.2 29.0 448 42.1 30.1 430 20.0 60 26 Short run perspective (1 year) 4/05 to 04/04 46.0 23.5 448 27.2 26.5 430 26.8 50.0 34 10/04 to 10/03 14.8 15.0 655 12.3 14.4 617 8.6 22.9 35 04/04 to 03/03 9.0 7.6 498 7.8 7.6 474 8.5 22.9 35 10/03 to 10/02 46.0 26.8 448 39.9 29.2 431 23.5 50 34 Very short run perspective (1/2 year) 4/05 to 10/04 41.5 22.2 383 31.1 36.1 369 27.4 41.7 36 10/04 to 04/04 11.0 10.5 664 8.2 10.1 624 0 5.4 37 04/04 to 10/03 4.4 4.7 656 4.4 4.4 619 8.3 16.7 36 10/03 to 03/03 3.8 2,8 501 2.5 2.5 686 0 5.1 39 03/03 to 10/02 41.51 27.4 383 38.8 26.6 369 22.2 41.6 36

17

6. Multivariate Analysis

Multivariate estimations had to be constrained to the low and medium voltage sector because the

number of firms which were active in the high voltage sector is too low (see Table 9). Further on, the

most models which have been estimated in the medium and low voltage sector are econometrically

problematic: They have a very low explanation power (low or negative R2) and/or the whole model

had to be excluded because of too few firms. Additionally, models which have the starting point in

October 2002 and vary with time perspective nearly lead to the same results. This means that firms

which have changed their prices in early periods have not changed prices later. To report about this

hypothesis it is sufficient to present models 1 + 2. Econometric feasible models are written in bold, not

feasible with standard font (see table 11).

Table 11: Estimated models 0,5 year 1 year affect on

1,5 years 2 years

2,5 years

10/02 A

03/03 B

10/03 C

04/04 D

10/04 E

04/05 F

10/02 A - Models

29+30 Models 19+20

Models 11+12

Models 5+6

Models 1+2

03/03 B - Models

27+28 Models 17+18

Models 9+10

Models 3+4

10/03 C - Models

25+26 Models 15-+16

Models 7+8

04/04 D - Models

23+24 Models 13+14

10/04 E - Models

21+22

Base point in time (starting point for

cheap and expensive)

04/05 F

standard: appendix bold:

paper

-

The first very short run perspective which lasted between October 2002 and March 2003 is given with

table 12. Model 29 represents the growth rates for the low voltage sector, model 30 complies the me-

dium voltage sector. Looking on the low voltage model we cannot reject that operators which were

located in East Germany have significantly increased access charges compared to West-German firms

(1 %-percent). Holding all other explaining variables constant East German operators marked up

charges by roughly 3.5 percent.

18

Table 12: Growth rates of Average Network Access Charges – Very Short Run Perspective Model 29

Low voltage 03/03 vs. 10/02

Model 30 Medium voltage 03/03 vs. 10/02

East-Germany? (Yes=1) 3.489*** (3.851)

5.380*** (4.167)

low (D = 2500 =>1) 1.614** (2.092) -

low (MWh = 500 =>1) - 0.535 (0.335)

medium(2500 < D = 3500=>1)

1.298* (1.699) -

Population/-Consumption density (Inhabitants per sqkm (I)/MWh per sqkm)?

medium(500 < MWh = 1700=>1) 0.348

(0.298)

low (CR = 50 =>1) 2.209** (2.209)

1.975 (1.009) Cable rate (CR)?

medium(50 < CR = 75=>1)

1.154 (1.490)

3.474** (2.398)

Dependent? (Yes=1) 0.673 (0.638)

1.356 (0.923)

Active in high voltage? (Yes=1) -0.496 (-0.598)

-2.137 (-1.373)

Expensive 10/02? (Yes=1) -3.889*** (-4.154)

-5.209*** (-4.256)

Cheap 10/02? (Yes=1) 4.010*** (5.424)

4.761*** (4.68)

Constant -3.333*** (-5.254)

-2.921 (-3.444)

R2 (adjusted) 0.178 0.142

F-Test (p-value) 9.962*** (0.000)

7.690*** (0.000)

N 377 366

Test of normality after Jarque/Bera2 H0a***

(0.000) H0

a*** (0.000)

Test of homoscedasticity after White2 H0na

(0.390) H0

na (0.293)

Estimation method OLS OLS 1 Significant on 10 %-, 5 %-, and 1 %-level: *, **, and ***; t-values in parentheses. 2 H0

a: null hypothesis could be rejected; H0

na: null hypothesis could not be rejected; p-values in parentheses. Source: Data set “Deregulated German electricity market 2006”; estimated with “EViews 5.1”.

Therefore, the hypothesis of invitation seems to be correct: The fact of working in East Germany and

hence having the allowance to charge higher prices - which was given by the market comparison

scheme - had created incentives to charge higher network prices. The population density variables

point at the same direction: Low or medium consumption density may be an argument of lower

economies of scale, but why have these firms increased their access charges signif icantly (10 percent-

level)? The price increasing effect is lower compared to East Germany: Low (medium) density opera-

tors increased their prices by 1.6 (1.3) percent. The last structural feature “cable rate” is not significant

19

or has the wrong direction: High cable rates are accepted as reason to have higher prices by market

comparison scheme, but low cable rate operators have significantly (5 percent level) increased their

prices between October 2002 and March 2003. During the same period medium cable rates operators

changed their prices by chance. Dependent and vertically integrated (active in high voltage) did not

decrease their charges as expected. Operators which had been expensive in October 2002 significantly

(1 percent level) lowered their prices by nearly four percent. Hence, the hypothesis of a strong influ-

ence of regulatory threat cannot be rejected for this group. A confirmation of one of our hypothesis is

also given for cheap firms in 2002: They increased their access charges by four percent during this

half year period which is given by a very low probability of error. At least one point becomes obvious:

All operators cut their access charges by 3.3 percent (significant on the one percent level). Hence, it

seems possible that at this point in time low voltage operators were “correctly” influenced by the regu-

latory threat.

Model 29 is able to explain 18 percent of the variance. Further on, the OLS-model is highly signif i-

cant, and the test of homoscedasticity indicates no problems. The assumption of normal distributed

residuals has to be rejected, but the normal distribution can be assumed approximately because 377

firms are included.

Model 30 describes the estimation made for the medium voltage section: We find a strong influence of

East Germany as in the previous model: East German medium voltage operators increased their prices

by more than five percent compared to operators which were located in West Germany (1 percent

significant). Consumption density had no influence. Operators which are characterized by a medium

cable rate increased their prices by more than three percent (5 percent level significant) which does not

fit to our hypothesis. Dependency and the degree of vertical integration had no influence. Expensive

firms in October 2002 seem to be affected by regulatory threat and therefore cut prices by more than

five percent (1 percent significant). As in the low voltage sector cheap firms hiked their prices by 4.8

percent (1 percent significant). But the estimation shows that all medium voltage operators were not

20

forced to cut prices, the power of regulatory threat seemed to be limited. The goodness of this model

does not vary to the previous one.

Table 13 presents the estimations which are made in the very long run perspective with starting point

October 2002. It is not necessary to discuss all results because the same results are given for the most

explaining variables and the most goodness criteria.

Table 13: Growth rates of Average Network Access Charges – Very Long Run Perspective Model 1


Model 2 Medium voltage

4/05 vs. 10/02

East-Germany? (Yes=1) 5.466*** (6.510)

5.914*** (4.294)

low (D = 2500 =>1) 2.011*** (2.717) -

low (MWh = 500 =>1) - 0,754 (0.449)

medium(2500 < D = 3500=>1)

1.577** (2.353) -

Population/-Consumption density (Inhabitants per sqkm (I)/MWh per sqkm)?

medium(500 < MWh = 1700=>1) - 0.041**

(0.034)

low (CR = 50 =>1) 2.193* (1.657)

1.593* (0.723) Cable rate (CR)?

medium(50 < CR = 75=>1)

1.348* (1.742)

2.992* (1.940)

Dependent? (Yes=1) 0.872 (0.874)

1.489 (0.835)


-1.679 (-0.929)

Expensive 10/02? (Yes=1) -5.656*** (-7.045)

-7.403*** (-5.660)

Cheap 10/02? (Yes=1) 5.074*** (7.386)

5.341*** (4.533)

Constant -3.646*** (-6.443)

-1.547* (-1.717)

R2 (adjusted) 0.254 0.154

F-Test (p-value) 17.820*** (0.000)

9.647*** (0.000)

N 446 428

Test of normality after Jarque/Bera2 H0

a*** (0.000)

H0a***

(0.000)


(0.105) H0

na (0.729)

Estimation method OLS OLS 1 Significant on 10 %-, 5 %-, and 1 %-level: *, **, and ***; t-values in parentheses. 2 H0


na: null hypothesis could not be rejected; p-values in parentheses. 3 Heteroscedastie-consistent-OLS-Estimation after White. Source: Data set “Deregulated German electricity market 2006”; estimated with “EViews 5.1.

21

• The medium cable rate of the low voltage sector becomes significant in the very long run perspec-

tive. But the sign of this variable has the wrong direction as discussed previously with low cable

rate. Further on: All low voltage operators have decreased their prices by more than 3.5 percent

until May 2005 (highly significant), but we expect theoretically that the regulatory threat become

ineffective with the end of NTPA.

• Changing to medium voltage sector a longer perspective seems to disclose that more explaining

variables are significant. Medium population density has a significant variable, but the wrong sign.

The coefficient is very small (less than 0.5 percent), hence this variable is economically spoken

nearly relevant. Further on, low cable rate becomes important on the long run, but the significance

is critical (only 10 percent) and the direction of the variable is unexpected. At least: The data sug-

gest that on the long run all medium voltage network owners have cut their prices by 1.5 percent.

This effect is unsure (critical 10 percent level) and contradicts the hypothesis of declining influ-

ence of NTPA.

7 Conclusions

At the end of 2001 the final association agreement was established in which a market comparison

scheme was a rigorous part. The aim of the market comparison scheme was to regulate the bottleneck

of the power sector: The prices for access to electricity grids. Instead of dictating the prices in detail

the duty to publish the prices was introduced. Analyzing the dynamics of access charges from 2002 to

2005 shows that many network operators have changed their prices. Some of them cut prices, some of

them charged higher prices, and few firms jumped up and down.

We can expect that the first published prices would be optimal in the view of the firm: If regulation

had worked they had to charge average cost price, if not they were able to impose monopoly prices.

Because there are little arguments for changing costs or demand variations the prices which were valid

in the first period should be stable. But several theoretical explanations for price variation are possible:

22

• Network operators had no experience with the calculation of access charges. During regulation

and in the first period of deregulation (until end of 2001) it had been not necessary to fix access

charges. Afterwards, price changes were thereafter the result of learning processes.

• The publishing of access charges made it possible to take prices under reflection of the pricing

behaviour of other natural monopolists. If an operator had been expensive, he had to fear regula-

tion hence he cut down access charges. Being a cheap network monopolist was the signal to in-

crease prices.

• The introduction of structural categories had allowed to charges high prices if a firm belonged to a

group with costs. Being part of a high cost group without having high prices could not be optimal.

An incentive to increase prices had been established.

• Institutional change like the abolishing of NTPA could lessen the importance of regulatory threat.

Hence, firms could react with price increasing behavior.

Several important results could be derived from our empirical analysis:

• The most important period of price changing behavior was from October 2002 to March 2003.

• East German operators increased their access charges. This structural feature could be an invita-

tion to increase prices. The other structural feature presumably had no influence.

• Expensive operators diminished their fees. Hence, it seems probable that they were affected by

regulatory threat.

• Cheap operators used the possibilities to raise prices.

• Regulatory threat had been important in the low voltage section, in the medium voltage maybe.

• If the abolition of NTPA became clear regulatory threat was still relevant.

These important results were obtained by multivariate estimations, but a lot of variance (more than ¾)

could not be explained with this method. This lack of information is certainly the result of not having

more firm specific data.

If we regard our results from the viewpoint of economic policy it seems clear that the final association

agreement partly worked as regulatory threat. But some unintended reactions could also be seen

23

which have increased access charges. If the new incentive regulation of NTPA will be established

these results can be important.

References

Baumol, W./Sidak, G. (1994), The Pricing of Inputs Sold to Competitors, Yale Journal of Regulation

11, 171-202.

Brunekreeft, G. (2001). Negotiated third party access in the German electricity supply Industry. Eco-

nomia Della Fonti Di Energia E Dell’ Ambiente , 44: 31-54.

Brunekreeft, G. (2002). Regulatory threat in vertically related markets: The case of German electricity.

CMI Working Paper 10. Cambridge: The Cambridge-MIT Institute.

Deregulierungskommission (1991), Marktöffnung und Wettbewerb, Stuttgart Poeschel.

EViews (1997). Eviews User´s Guide, Irvine: (Quantitative Micro Software).

Federal Ministry of Economic Affairs (2006a), Neues Energiewirtschaftsrecht seit 13. Juli 2005

http://www.bmwi.de/BMWi/Navigation/Energie/energiewirtschaftsrecht.html.

Federal Ministry of Economic Affairs (2006b), Energiewirtschaftsgesetz für Strom-Gasnetze tritt in

Kraft - Bundeskabinett verabschiedet Verordnungen zu Zugang und Entge lten.

http://www.bmwi.de/BMWi/Navigation/Energie/energiewirtschaftsrecht,did=72212.html

Federal network agency (2006) Zuständigkeit der Bundesnetzagentur und Aufgabenabgrenzung,

http://www.bundesnetzagentur.de/enid/32e518859e65c656310d405ec00d92b1,0/Allgemeine_Informat

ionen/Zustaendigkeit_und_Aufgabenabgrenzung_xf.html

Glachant, J.-M./Dubois, U./Perez, Y. (2004), Deregulating with no Regulator : Is Germany Electricity

Transmission Regime Institutionally Correct? University Paris/Adis/WP 2004-2,

http://www.grjm.net/index.php?option=com_content&task=view&id=189&Itemid=62.

Greene, W.E. (1997). Econometric Analysis. 3rd edition. New Jersey: (Prentice-Hall International).

24

Growitsch, C./Wein, T. (2004), The Contestable Markets Theory - Efficient Advice for Economic

Policy, in: Beckers, T./Hirschhausen, von C./Mitusch, K. (Editors), Trends in Infrastructure Regula-

tion and Financing, London: (Edward Elgar), 21-41.

Growitsch, C./Wein, T. (2005), The Negotiated Third Party Access - an Industrial Organisation Per-

spective’, European Journal of Law and Economics, Vol. 20, No. 2, 165-183.

Gujarati, D.N. (1995). Basic Econometrics. 3rd edition. Singapore: (McGraw-Hill International).

Katzfey, J. et al. (2002). Netznutzungsentgelte und Strukturmerkmale . Berlin: (VDN).

Kawakatsu, H. (1998). Using Eviews. Boston/Burr Ridge: (Irwin/McGraw-Hill).

Meran, G./von Hirschhausen, C. (2004), Corporate Self Regulation vs. Ex-ante Regulation of Network

Access – A Model of the German Gas Sector, Discussion Paper 436, German Institute for Economic

Research, Berlin, August 2004.

Monitoring-Report (2003), Bericht des Bundesministeriums für Wirtschaft und Arbeit an den deut-

schen Bundestag über die energiewirtschaftlichen und wettbewerblichen Wirkungen der Verbändeve-

reinbarungen (Monitoring-Report).

Sidak, J. G./Spulber, D.F. (1997), Deregulatory Takings and the Regulatory Contract – The Competi-

tive Transformation of Network Industries in the United States, Cambridge (Cambridge University

Press).

VDN (2006), Netznutzungsentgelte, http://www.vdn-berlin.de/netznutzungsentgelte.asp.

Wein, T. (2005), Associations' Agreement and the Interest of the Network Suppliers - The Strategic

Use of Structural Features, Working Paper, Institute of Econmics, University of Lueneburg, March

2005, http://www.uni-lueneburg.de/fb2/vwl/papers/index.htm.

25

Appendix Table A-1: Growth rates of Average Network Access Charges – Long Run Perspective 4/05 vs. 03/03 10/04 vs 10/02 Model 3

Low voltage


Model 5 Low

voltage

Model 6 Medium Voltage

East-Germany? (Yes=1) 2.379*** (3.924)

2.991*** (2.750)

4.905*** (6.012)

0.538 (0.933)

low (D = 2500 =>1) - - 2.800**

(2.135) -

low (MWh = 500 =>1)

0.712 (1.423)

2.090* (1.781) - 1.007**

(1.748) medium(2500 < D = 3500=>1) - - 1.294**

(1.977) -

Population/-Consumption density (Inhabi-tants per sqkm (I)/MWh per sqkm)? medium(500 <

MWh = 1700=>1) 0.630

(1.380) 1.446

(1.591) -0.422 (-0.391)

low (CR = 50 =>1)

1.374 (1.452)

-0.945* (-0.617)

2.800** (2.135)

1.896* (1.123) Cable rate (CR)?

medium (50 < CR = 75=>1)

0.355* (0.716)

-0.679* (-0.596)

1.348* (1.742)

3.937*** (2.600)

Dependent? (Yes=1) -0.018 (-0.027)

-0.901 (-0.692)

1.322 (1.367)

2.224 (0.949)


-0.318 (-0.236)

-1.516 (-1.439)

-2.676** (-2.028)

03/03? (Yes=1) -2.067*** (-3.637)

-3.639*** (-3.633) - -

Expensive 10/02? (Yes=1) - - -5.024***

(-6.458) -7.669*** (-7.312)

03/03? (Yes=1) 1.395*** (2.996)

1.557* (1.766) - -

Cheap

10/02? (Yes=1) - - 4.986*** (7.465)

5.616*** (5.129)

Constant -0.798** (-2.006)

0.411* (0.604)

-3.795* (-6.908)

-2.220* (-3.232)

R2 (adjusted) 0.049 0.029 0.247 0.230

F-Test (p-value) 3.801*** (0.000)

2.496*** (0.009)

17.083*** (0.000)

15.082*** (0.000)

N 484 458 442 425


a*** (0.000)

H0a***

(0.000) H0

a*** (0.000)

H0a***

(0.000)


(0.479) H0

na (0.999)

H0na

(0.100) H0

a*** (0.035)

Estimation method OLS OLS OLS OLS3 1 Significant on 10 %-, 5 %-, and 1 %-level: *, **, and ***; t-values in parentheses. 2 H0



26

Table A-2: Growth rates of Average Network Access Charges – Medium Run Perspective 4/05 vs. 10/03 10/04 vs 03/03 Model 7

Low voltage


Model 9 Low

voltage


East-Germany? (Yes=1) 1.581*** (3.352)

2.589*** (2.911)

1.696** (2.076)

0.539 (0.936)

low (D = 2500 =>1) - - 0.420

(0.940) -

low (MWh = 500 =>1)

0.686* (1.874)

1.673* (1.778) - 1.026*

(1.651) medium(2500 < D = 3500=>1) - - 0.295

(0.704) -


MWh = 1700=>1) 0.767

(2.177) 0.394 (0577) -0.195

(-0.414) low (CR = 50 =>1)

1.696** (2.384)

-0.750* (-0.621)

1.511*** (3.248)

-0.274 (-0.414) Cable rate (CR)?

medium (50 < CR = 75=>1)

0.544 (1.393)

0.259* (0.292)

0.483 (1.073)

0.302 (-0.429)

Dependent? (Yes=1) -0.416 (-0.722)

-0.803 (-0.727)

0.377 (0.552)

-0.134 (-0.187)


-0.108 (-0.094)

-0.858 (-1.430)

-0.778 (-1.254)-

03/03? (Yes=1) -1.446*** (-3.386)

-3.003*** (-3.707) - -

Expensive 10/03? (Yes=1) - - -1.697**

(-2.547) -0.826

(-1.298)

03/03? (Yes=1) 1.193*** (3.396)

0.777* (1.152) - -

Cheap

10/03? (Yes=1) - - 1.004** (2.284)

0.806** (2.266)

Constant -0.675** (-2.22)

0.682* (1.287)

-0.686** (-2.1.21)

-0.114 (-0.461)

R2 (adjusted) 0.050 0.012 0.036 0.016

F-Test (p-value) 4.702*** (0.000)

2.275** (0.016)

3.012*** (0.002)

1.853* (0.057)

N 634 594 484 425


a*** (0.000)

H0a***

(0.000) H0

a*** (0.000)

H0a***

(0.000)


(0.284) H0

na (0.998)

H0a****

(0.001) H0

a*** (0.000)

Estimation method OLS OLS OLS3 OLS3 1 Significant on 10 %-, 5 %-, and 1 %-level: *, **, and ***; t-values in parentheses. 2 H0



27

Table A-3 Growth rates of Average Network Access Charges – Medium Run Perspective Model 11



4/04 vs. 10/02

East-Germany? (Yes=1) 4.823*** (6.169)

5.514*** (5.138)

low (D = 2500 =>1) 1.715** (2.483) -

low (MWh = 500 =>1) - 0.682 (0.435)

medium(2500 < D = 3500=>1) 1.160* (1.854) -

Population/-Consumption den-sity (Inhabitants per sqkm (I)/MWh per sqkm)?

medium(500 < MWh = 1700=>1) -0.539** (-0.522)

low (CR = 50 =>1) 0.985 (0.782)

1.945 (1.185) Cable rate (CR)?

medium(50 < CR = 75=>1) 0.741 (1.022)

4.181*** (2.689)

Dependent? (Yes=1) 1.605* (1.730)

1.923 (0.814)


-2.246 (-1.723)

Expensive 10/02? (Yes=1) -4.918*** (-6.585)

-6.928*** (-6.614)

Cheap 10/02? (Yes=1) 4.716*** (7.365)

5.431*** (5.227)

Constant -3.646*** (-6.662)

-2.599*** (-4.042)

R2 (adjusted) 0.238 0.216

F-Test (p-value) 16.266*** (0.000)

13.965*** (0.000)

N 442 425


a*** (0.000)

H0a***

(0.000)


(0.104) H0

a*** (0.024)

Estimation method OLS OLS3 1 Significant on 10 %-, 5 %-, and 1 %-level: *, **, and ***; t-values in parentheses. 2 H0



28

Table A-4 Growth rates of Average Network Access Charges – Short Run Perspective 4/05 vs. 04/04 10/04 vs 10/03 Model 13

Low voltage


Model 15 Low

voltage


East-Germany? (Yes=1) 1.259*** (2.835)

2.286*** (2.628)

0.631 (1.461)

1.277*** (2.587)

low (D = 2500 =>1) - - 0.289

(0.995) -

low (MWh = 500 =>1)

0.704** (2.087)

1.148 (1.269) - 0.982*

(1.880) medium(2500 < D = 3500=>1) - - 0.378

(1.244) -


MWh = 1700=>1) 0.732** (2.254)

0.925 (1.410) -0.167

(-0.442) low (CR = 50 =>1)

1.477** (2.233)

-0.704 (-0.608)

1.783*** (2.983)

-0.201 (-0.299) Cable rate (CR)?

medium (50 < CR = 75=>1)

0.501 (1.394)

-0.210 (-0.246)

0.706* (1.804)

1.039** (2.111)

Dependent? (Yes=1) -0.559 (-1.047)

-0.619 (-0.579)

-0.098 (-0.176)

-0.165 (-0.268)

Active in high voltage? (Yes=1) 0.433 (0.751)

0.441 (0.398)

-0.547 (-1.055)

-0.842 (-1.318)

04/04? (Yes=1) -1.186*** (-2.954)

-2.577*** (-3.247) - -

Expensive 10/03? (Yes=1) - - -0.805**

(-2.199) -1.786*** (-3.972)

04/04? (Yes=1) 0.819** (-2.530)

0.418 (0.643) - -

Cheap

10/03? (Yes=1) - - 0.711** (2.284)

0.814*** (2.174)

Constant -0.563** (-2.023)

0.601 (1.197)

-0.500** (-2.273)

0.084 (0.286)

R2 (adjusted) 0.036 0.009 0.030 0.046

F-Test (p-value) 3.638*** (0.000)

1.626 (0.104)

3.192*** (0.001)

4.171*** (0.000)

N 643 601 634 594


a*** (0.000)

H0a***

(0.000) H0

a*** (0.000)

H0a***

(0.000)


(0.561) H0

na (1.000)

H0na

(0.050) H0

a*** (0.368)

Estimation method OLS OLS OLS3 OLS 1 Significant on 10 %-, 5 %-, and 1 %-level: *, **, and ***; t-values in parentheses. 2 H0



29

Table A-5: Growth rates of Average Network Access Charges – Short Run Perspective 4/04 vs. 03/03 10/03 vs 10/02 Model 17

Low voltage


Model 19 Low

voltage


East-Germany? (Yes=1) 1.564** (2.180)

0.539 (0.936)

4.503*** (5.261)

5.269*** (4.869)

low (D = 2500 =>1) - - 1.591**

(2.239) -

low (MWh = 500 =>1)

0.007 (0.021)

1.026* (1.651) - 0.071

(0.047) medium(2500 < D = 3500=>1) - - 1.068

(1.522) -


MWh = 1700=>1) 0.036

(0.119) -0.195

(-0.414) 0.111 (0.107)

low (CR = 50 =>1)

0.111 (0.335)

-0.274 (-0.429)

0.941 (0.865)

1.799* (1.184) Cable rate (CR)?

medium (50 < CR = 75=>1)

0.162 (0.240)

0.302 (0.355)

0.804 (1.065)

3.663** (2.340)

Dependent? (Yes=1) 0.624 (1.049)

-0.124 (-0.187)

1.480 (1.314)

2.217 (0.936)

Active in high voltage? (Yes=1) -0.944* (-1.883)

-0.778 (-1.254)

-1.085 (-1.245)

-1.979* (-1.696)

03/03? (Yes=1) -1.250** (-2.100)

-0.826 (-1.298) - -

Expensive 10/02? (Yes=1) - - -4.458***

(-4.998) -6.072*** (-5.892)

03/03? (Yes=1) 0.795** (2.522)

0.806** (2.266) -

Cheap

10/02? (Yes=1) - - 4.616*** (6.901)

5.642*** (5.325)

Constant -0.390* (-1.680)

-0.114 (-0.461)

-3.561*** (-6.684)

-3.040*** (-4.592)

R2 (adjusted) 0.049 0.015 0.216 0.194

F-Test (p-value) 3.373*** (0.000)

1.853*** (0.057)

14.352*** (0.000)

12.378*** (0.000)

N 485 460 441 426


a*** (0.000)

H0a***

(0.000) H0

a*** (0.000)

H0a***

(0.000)

Test of homoscedasticity after White2 H0a***

(0.000) H0

a*** (0.001)

H0a***

(0.025) H0

a*** (0.017)

Estimation method OLS3 OLS3 OLS3 OLS3 1 Significant on 10 %-, 5 %-, and 1 %-level: *, **, and ***; t-values in parentheses. 2 H0



30

Table A-6: Growth rates of Average Network Access Charges – Very Short Run Perspective 4/05 vs. 10/04 10/04 vs 04/04 Model 21

Low voltage


Model 23 Low

voltage


East-Germany? (Yes=1) 0.974*** (3.337)

1.329* (1.783)

0.395*** (1.104)

-0.559*** (-1.221)

low (D = 2500 =>1) - - 0.335

(1.232) -

low (MWh = 500 =>1)

0.396* (1.786)

0.670 (0.864) - -0.165

(-0.345) medium(2500 < D = 3500=>1) - - 0.353

(1.345) -


MWh = 1700=>1) 0.418* (1.950)

0.529 (0.940) 0.149

(0.429) low (CR = 50 =>1)

-0.024 (-0.055)

-0.558 (-0.560)

1.577*** (2.959)

0.019 (0.031) Cable rate (CR)?

medium (50 < CR = 75=>1)

-0.152 (-.642)

-0.761 (-1.034)

0.674** (2.329)

0.534 (1.180)

Dependent? (Yes=1) -0.350 (-0.995)

-0.588 (-0.638)-

-0.238 (-0.552)

0.104 (0.184)

Active in high voltage? (Yes=1) 0.463 (1.197)

0.730 (0.755)

0.005 (0.010)

-0.029 (-0.049)

10/04? (Yes=1) -0.626** (-2.356)

-1.204* (-1.773) - -

Expensive 04/04? (Yes=1) - -0.705**

(-2.179) 0.382

(0.917)

10/04? (Yes=1) 0.583*** (2.734)

0.007* (0.012) -

Cheap

04/04? (Yes=1) - - 0.289 (1.109)

-0.170 (-0.495)

Constant -0.798** (-2.006)

0.569 (1.324)

-0.353 (-1.575)

0.117 (0.443)

R2 (adjusted) 0.027 -0.004 0.021 -0.007

F-Test (p-value) 3.004*** (0.002)

0.759 (0.655)

2.542*** (0.007)

0.535*** (0.849)

N 645 679 642 600


a*** (0.000)

H0a***

(0.000) H0

a*** (0.000)

H0a***

(0.000)


(0.648) H0

na (0.999)

H0na

(0.181) H0

na (0.250)

Estimation method OLS OLS OLS OLS 1 Significant on 10 %-, 5 %-, and 1 %-level: *, **, and ***; t-values in parentheses. 2 H0



31

Table A-7 Growth rates of Average Network Access Charges – Very Short Run Perspective 4/04 vs. 10/03 10/03 vs 03/03 Model 25

Low voltage


Model 27 Low

voltage


East-Germany? (Yes=1) 0.303*** (1.572)

0.233 (0.690)

1.280* (1.849)

0.615** (2.012)

low (D = 2500 =>1) - - -0.017

(-0.062) -

low (MWh = 500 =>1)

-0.048 (-0.369)

0.617* (1.686) - 0.347

(1.052) medium(2500 < D = 3500=>1) - - -0.137

(-0.542) -


MWh = 1700=>1) 0.015

(0.110) -0.612** (-2.353) 0.565**

(2.221) low (CR = 50 =>1)

0.219 (1.432)

0.266 (0.909)

-0.123 (-0.191)

-0.253 (-0.601) Cable rate (CR)?

medium (50 < CR = 75=>1)

0.013 (0.064)

0.262 (0.909)

0.134 (0.551)

-0.464 (-1.458)

Dependent? (Yes=1) 0.141 (0.294)

-0.184 (-0.449)

0.451 (1.450)

0.210 (0.600)


-0.468 (-1.059)

-0.412 (-1.595)

-0.172 (-0,465)

10/03? (Yes=1) -0.175 (-0.932)

-0.413 (-1.342) - -

Expensive 03/04? (Yes=1) - - -1.144**

(-2.058) -0.682** (-2.431)

10/03? (Yes=1) 0.402*** (2.880)

0.374 (1.438) -

Cheap

03/04? (Yes=1) - - 0.281 (1.082)

0.411* (1.667)

Constant -0.128 (-1.263)

0.003 (0.014)

-0.096 (-0.487)

-0.273 (-1.432)

R2 (adjusted) 0.013 0.018 0.028 0.015

F-Test (p-value) 1.951*** (0.043)

2.222** (0.019)

2.576*** (0.007)

1.761* (0.073)

N 635 591 487 463


a*** (0.000)

H0a***

(0.000) H0

a*** (0.000)

H0a***

(0.000)

Test of homoscedasticity after White2 H0a***

(0.000) H0

na (0.272)

H0na

(0.100) H0

a*** (0.648)

Estimation method OLS3 OLS OLS OLS 1 Significant on 10 %-, 5 %-, and 1 %-level: *, **, and ***; t-values in parentheses. 2 H0


na: null hypothesis could not be rejected; p-values in parentheses. 3 Heteroscedastie-consistent-OLS-Estimation after White. Source: Data set “Deregulated German electricity market 2006”; estimated with “EViews 5.1

the difficulty to behave as a (regulated) natural ......(ntpa). the negotiations about the economic...

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