suppliers between 1985 and 2005. A secondary output was that imports from Canada
increased, and in 2001, a “black swan” situation was validated (Zajicek 2001)
through the fact that California had a cold winter and a hot summer, followed by a
spike in the price of natural gas and the bankruptcy of corrupt and greedy Enron;
because of these factors, the market collapsed, and suppliers stopped selling electric
energy to consumers (Bodislav 2013b). The “deregulation law” transformed into one
of the biggest failures of the century. Although time has passed, countries from
Eastern Europe are keen on deregulating their power grid and suppliers, and with the
help of politicians, businessmen, scholars, and the Internet, these countries will face
global lobbying shifted toward deregulating their markets, and new players will run
the show, especially those from countries that are already developed on this side of
the industry. The fact that these CEE countries are also members of the European
Union increased the chances of powerful failure of the system because these
countries are interconnected between them. Another common feature of these
countries is that they are all ex-communist countries, and their experience is shifted
toward a political class that serves for the common good of interest groups but not of
the people. There is a sudden need for a shift toward business development inside
public utility companies that are controlled by politicians and creating economic
hybrids that are state-owned, but privately run. Government regulation should be
diluted (Peltzman 1989: Schwarz 2001), and the regulation that will be in power
should be benchmarked before using them.
9.4 A General Overview on Privatization of Energy
Markets
Most of big state-owned companies operate with loss, but they don’t have a negative
output just because of bad allocation inefficiency, but mostly because of
underperforming management, macroeconomic environment that is not biased
toward policy making for pushing economic growth to new heights (Bodislav
2015). We could find these issues inside big privately owned companies that are
sometimes in monopoly positions and that run immense cash flow, like the case of
Gazprom, but at the end of the fiscal year, the financials show small to nonexistent
profits. Inefficiency in state-owned companies is also based on lack of stimulus and
discipline for the top management of those companies. To dilute the lack of
motivation, we need to stimulate the entire flow of the processes behind due
diligence and corporate governance, but not only linking bonuses to profits but
also with trends and the dilution of the company’s monopoly (Finsinger and
Vogelsang 1985). Stiglitz (1988) highlighted that in some countries another measure
that postpones performance in the public sector is the push a ceiling for salaries for
top managers, that ceiling being that salary of the country’s president. In the USA,
the job of state-owned manager has these limitations, but also it has the safety net of
having in your hands the tool of privatizing the company.
148
D.-A. Bodislav et al.
increased, and in 2001, a “black swan” situation was validated (Zajicek 2001)
through the fact that California had a cold winter and a hot summer, followed by a
spike in the price of natural gas and the bankruptcy of corrupt and greedy Enron;
because of these factors, the market collapsed, and suppliers stopped selling electric
energy to consumers (Bodislav 2013b). The “deregulation law” transformed into one
of the biggest failures of the century. Although time has passed, countries from
Eastern Europe are keen on deregulating their power grid and suppliers, and with the
help of politicians, businessmen, scholars, and the Internet, these countries will face
global lobbying shifted toward deregulating their markets, and new players will run
the show, especially those from countries that are already developed on this side of
the industry. The fact that these CEE countries are also members of the European
Union increased the chances of powerful failure of the system because these
countries are interconnected between them. Another common feature of these
countries is that they are all ex-communist countries, and their experience is shifted
toward a political class that serves for the common good of interest groups but not of
the people. There is a sudden need for a shift toward business development inside
public utility companies that are controlled by politicians and creating economic
hybrids that are state-owned, but privately run. Government regulation should be
diluted (Peltzman 1989: Schwarz 2001), and the regulation that will be in power
should be benchmarked before using them.
9.4 A General Overview on Privatization of Energy
Markets
Most of big state-owned companies operate with loss, but they don’t have a negative
output just because of bad allocation inefficiency, but mostly because of
underperforming management, macroeconomic environment that is not biased
toward policy making for pushing economic growth to new heights (Bodislav
2015). We could find these issues inside big privately owned companies that are
sometimes in monopoly positions and that run immense cash flow, like the case of
Gazprom, but at the end of the fiscal year, the financials show small to nonexistent
profits. Inefficiency in state-owned companies is also based on lack of stimulus and
discipline for the top management of those companies. To dilute the lack of
motivation, we need to stimulate the entire flow of the processes behind due
diligence and corporate governance, but not only linking bonuses to profits but
also with trends and the dilution of the company’s monopoly (Finsinger and
Vogelsang 1985). Stiglitz (1988) highlighted that in some countries another measure
that postpones performance in the public sector is the push a ceiling for salaries for
top managers, that ceiling being that salary of the country’s president. In the USA,
the job of state-owned manager has these limitations, but also it has the safety net of
having in your hands the tool of privatizing the company.
148
D.-A. Bodislav et al.