Over the past two decades it has been questioned whether the electric utility industry is a natural monopoly. Electricity generation is no longer considered a natural monopoly and the topic is debated in relation to electricity distribution. This article explores the main contributions in this field in order to apply their findings to the Spanish Electric Utility Industry in the inter-war period. The study focuses on one of the major Spanish companies, Sociedad Hidroeléctrica Española, and shows that generation, transmission and distribution of electricity were. natural monopolies. The results indicate that the monopolistic structure which the inter-war electric utility industry exhibited was the optimal form of organisation.
