European gas market liberalisation: are regulatory regimes moving towards convergence?

This study has assessed the evolution of regulatory regimes in European gas markets on the basis of panel data from the old member states (EU15) for the period between 2000 and 2005. The methodology used enabled us to assess whether regulatory regimes are converging. In this context, an index has been developed to measure the extent to which member states are closing the gap between their regulatory regime and a best-practice model. Due to the discretion allowed within the framework regulations of the Gas Directives, member states can choose which regulatory instruments to apply. As a consequence, the reforms have resulted in diverging regulatory regimes within the framework for gas market organisation in the European Union. Our analysis suggests that the old member states have only achieved 54% of best practice in terms of European regulation for competition. During the final two years of our study period, member states became increasingly reluctant to apply best practice. In fact, no country followed the UK example and achieved what could be categorised as best practice. The majority of countries did, however, improve their regulatory regimes. At the end of 2005, Denmark, Spain, the Netherlands, Italy, Belgium, Austria, Ireland and France could be put in a group that were moving towards best practice. Germany, Luxembourg and Sweden appeared less enthusiastic, with minimal convergence throughout the entire period.