The Arab countries have enjoyedsustained economic growth in recent years, and the higheconomic growth has triggered a rapid increase in energydemand, particularly for electricity. Besides enablingenergy imports, interconnected power networks impart aseries of additional benefits such as improved systemreliability, reduced reserve margins, reactive powersupport, and energy exchanges that take advantage of dailyand seasonal demand diversity and disparities in marginalproduction costs. As a result, a world-class electricitysupply system can be achieved with much lower capitalexpenditures and ongoing expenses than will otherwise beattainable on an individual-country basis. The regionalpower interconnection of the Gulf Cooperation Council (GCC),allows electricity exchange among its six member states:Kuwait, Saudi Arabia, Bahrain, Qatar, the United ArabEmirates (UAE), and Oman under an agreement signed in 2009.The interconnection is targeted at sharing capacity reserveand improving supply reliability, which will reduce the needfor investment in new generation capacity. This study, whichfocuses on the development of the institutional andregulatory framework for electricity trade in the Arabworld, is one of three currently being carried out by theLeague of Arab States (LAS) on the development of regionalelectricity markets (REMs): part one: study ofinterconnections of electrical systems in the Arab world;part two: study of electricity-gas trade among the Arabcountries; and part three: study of institutional andregulatory frameworks. This study focuses on theinstitutional and regulatory aspects of cross-border tradeand electricity market integration among the 22 LAS membercountries, and between the Arab countries and potentialneighboring markets. This study comprises two phases. Phaseone, is main report (volume one), examines regional marketstructure and design. Phase two (volume 2) examinesprinciples of market regulations and legal arrangementsincluding a draft road map for a transition path towardmarket integration and governance documentation includingdrafts memorandum of understanding, general agreement,general pan Arab electricity market agreement, and regionalgrid code.