RISKS OF REGULATION IN NETWORK INDUSTRY – CASE OF THE SLOVAK REPUBLIC
AbstractHistorically, the Slovak Republic infrastructure involved monopolies, with the State operating sectors of electricity, telecommunications, postal services, gas, and water supply through state enterprises. The electric energy sector has since become privatized in the Slovak Republic. Because of insufficient competition (oligopoly), a regulatory office formed with the role of price regulation. In this pricing area, the electricity supply sector suffered turmoil in the Slovak Republic. This paper addresses some practicalities of regulation and proposes measures to minimize risks relating to decisions of the regulating authority. The current issues reflect problems of price regulation of electricity in the Slovak Republic that have resulted in political disputes. This paper describes the regulatory framework of network industries in the Slovak Republic and general assumptions for transparent and efficient regulatory process. It includes an analysis of certain aspects of price regulation and the role and responsibilities of a chairman and other stakeholders in this process. Some measures are proposed to minimize the future risks of price regulation. These measures cover internal subjects and processes as well as the external environment involving stakeholders and their influence on negotiating prices.
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