The first step in the process is expected in 2002 or 2003. Although EU candidate countries like Hungary must move quickly to deregulate, fast liberalisation of the region's markets could in fact result in a high level of stranded costs. Stranded costs often result from the high fixed costs associated with running electricity companies where production capacity significantly exceeds local demand. Establishing regional exchanges to take advantage of excess capacity is one answer, but electricity producers will have to compete with cheap nuclear power which can easily be exported from plants in Hungary, the Czech Republic and Slovakia. There are also stranded costs related to the inefficient and environmentally problematic coal-fired plants which will not be competitive in the region's deregulated market.
Pricing is also a challenging issue for the region.
In EU countries, liberalisation has resulted in an overall decline of prices. Governments already keep prices of regulated industries artificially low in an effort to fight inflation. The governments did increase the price of oil and gas dramatically in the past year. Electricity tariffs, however, were kept lower than the actual increase in costs. Household electricity tariffs are unlikely to reflect true costs for a long time.