Journal of Economics, Finance and Management Studies ISSN(print): 2644-0490, ISSN(online): 2644-0504 Volume 4 Issue 01 January 2021 Article DOI: 10.47191/jefms/v4-i1-05 Page No.- 344-349 JEFMS, Volume 4 Issue 01 January 2021 www.ijefm.co.in Page 344 Restructuring of Electric Power Sector: The Transition from Monopoly to Competitive Market Conditions Dario Maradin University of Rijeka, Faculty of Economics and Business, Ivana Filipovića 4, 51000 Rijeka, Croatia. ABSTRACT: The electric power sector is facing comprehensive changes reflected in the reorganization of the entire market, in the economic relations management and the technical and technological functioning of companies. The changes are in fact a consequence of various restructuring processes in the electric power sector, which are parallelly unfolding depending on the course and dynamics of the structural reforms implementation. In the electric power industry, these processes primarily involve liberalization, namely, opening the market to all business entities, and thus introducing competition to the electricity power market. The establishment of competition in the electric power industry is facilitated by the process of vertical unbundling of electric power activities, which can be divided into market-oriented and regulated activities. The purpose of this paper is to present the structural reforms and processes of restructuring the electric power industry which is transforming from monopoly market structures to competitive market conditions. KEYWORDS: electric power market, liberalization, competition, vertical unbundling of electric power activities 1. INTRODUCTION Various electricity management processes take place in the electric power industry. The electric power sector represents the electricity generation industry and the end-users supply. In this sense, although electricity as an input is present in most production and service industries, the electric power industry is determined by the electricity generation and supply process. The electric power sector is present on the market as a specific technical and technological system. The particularity of electric power sector arises, first of all, from the market relations of the overall system functioning and the manner in which the system operates on competitive and regulated bases, and from the formation and application of production output in the form of electricity. Initially, the entire electric power industry developed in monopoly market conditions where there was a monopoly, vertically integrated company performing all electric power activities. Over time, due to the impact of structural reforms and restructuring processes, the electric power market began to transform from monopoly market conditions to bilateral market relations, competitive and non-competitive. Therefore, the electric power sector operates in market oriented electric power activities and regulated electricity activities due to the existence of a natural monopoly in that part of the electric power sector. Given the mentioned above, the purpose of this paper is to present the structural reforms and processes of restructuring the electric power industry which is transforming from monopoly market structures to competitive market conditions. 2. LIBERALIZATION AND COMPETITION IMPLEMENTATION INTO ELECTRIC POWER SECTOR In the electric power sector, as well as in other infrastructure activities of the public sector, for example, in the telecommunications sector, water supply or gas markets, structural reforms and restructuring processes aiming to improve market efficiency are carried out. The resulting changes implied transformation from monopoly market structures into, initially partially, competitive market conditions 1 . Since the beginning of the 1980s until present time, the electric power sector has been facing a series of 1 Restructuring, privatization and deregulation of electric power industry began in the early 1980s in Chile, New Zealand and the United Kingdom (Larsen and Bunn, 1999).