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Iceland has a competitive market for power generation and supply, while transmission and distribution are subject to concession arrangements and specific regulatory oversight. The 2003 Electricity Act brought about major changes for Iceland’s electricity market.

The Act’s purpose was to create conditions conducive to effective competition in electricity supply, to step up efficiency in transmission and distribution, ensure quality and security of supply, and enhance consumer protection. To this end, the Act unbundled the market structure into electricity generation, transmission, distribution and supply.

Competition – concession

The Icelandic market for electricity generation and supply has been opened up to free competition. However, transmission and distribution are subject to concession arrangements, based on the rationale that these are utility services – equivalent to public highways – to which everybody should have equal access.

Concession activities are regulated by the National Energy Authority (Orkustofnun), which oversees aspects such as pricing, quality and security of supply. Under Icelandic law, the one and same power company can be a generator, distributor and supplier. However, accounting separation is required between concession and competitive activities.

Landsnet operates the transmission system and administers its system operations. The transmission system consists of all electrical lines, substations and related infrastructure transmitting power at a voltage of 66 kV or higher, with some exceptions from this definition.