The legal reforms in the power economy must result in more scope for competition-oriented adaptation processes. Customers must be given more choice in selecting their sources of electricity. In this connection, adequate transition phases must be tolerated in order to prevent the hazard of stranded investments. However, there should be no further monopolistic compartmentalization in the new regulations. The electricity prices charged industry in Germany are still among the highest in Europe, even after the abolition of the coal penny and the proportion retained by the domestic power industry. Compared to neighboring countries, the prices of electricity are still higher in Germany by an average 20 to 30%. This cumulated power cost handicap of DM 5 to 6 billion suffered by German industry compared to other EU economies is not likely to make Germany attractive for industrial production to foreign investors. As a consequence, capital as a production factor more and more bypasses the Federal Republic. There is no doubt that the situation of the power industry in Germany can be made more competitive only by abolishing monopolies and in addition, by curtailing government-imposed handicaps, such as lengthy licensing procedures, strategies obstructing the use of nuclear power, and added ecological costs. Conditions in the electricity industry must be harmonized in Europe on a broad base. Although it is still a vision that every electricity consumer, not only industry will be able in the future to pick his supplier, the energy business on the whole is going to be much more turbulent in the next few years. Power utilities will be well advised to bear in mind that the electricity prices charged to major special customers cannot possibly exceed the long-term incremental costs of in-house electricity generation by industry. In order for competition to work at the power generation level, there must be no discriminating barriers to access to the power grid. Competition-oriented selection must not stop at the city, boundaries. Electricity consumers must be allowed to choose among contracting parties on the supply side. Local monopolies ill customer-relations block any efficient structural change. The model of organizing a monopolistic supply and purchasing system is also fraught with considerable control problems. Major follow-on costs are likely to arise should a new regulatory authority be established to control the transmission of electricity. Experience in the United States with the explicit introduction of a legal principle of transmission in line-bound power supply systems provides ample reason for proceeding cautiously. In the meantime, the regulatory machinery in the United States has reached a staff of 15,000 to 20,000 persons. By comparison, the number of regulators in the Federal Republic of Germany at present amounts to less than 100. As the regulatory situation is changing, so are the realms of established power utilities. It is not surprising to see, therefore, that there is strong resistance to the deregulation planned by the German federal government. This means that compromises must be found in the interest of a parliamentary majority in favor of deregulation.
