Regulation and investment in the EU natural gas sector: A panel data analysis

In this paper we evaluate the impact of regulation on the investment carried by natural gas transmission and distribution companies in the EU through a panel data of fixed effects. Our sample is composed by nine countries and twenty-three utilities for the period 2000-2009. We find that there is a significant, positive impact on the regulated companies´ investment whenever cost-of-service regulation is implemented. Given the empirical evidence and the perspectives for the sector evolution, we conclude for a paradigm shift in the regulation model towards the development and the acceptance of a traditional approach that guarantees the security of supply and the expected demand growth.