The goal of this research was through the analysis of the natural monopoly on the electricity market in the Republic of Croatia, to point out the effects of the natural monopoly on the economy. The electricity distributor HEP (Croatian Electricity Company) was taken as an example. A natural monopoly occurs when there is a complete absence of competition because a certain company can supply the market with lower costs and higher quality than if there was some form of competition. A monopoly is a permanent market situation in which there is only one supplier of a certain type of product or service. Some of the reasons for the emergence of a monopoly are the control of the entire supply of inputs or products by a company, a company may have a patent that excludes other companies, economies of scale may operate in some industries and a monopoly may be created through government privileges. HEP in Croatia has more than 2.3 million consumers, i.e. measuring points for the delivery of electricity and produces electricity in 25 hydroelectric power plants, 4 thermal power plants and in 3 thermal power plants -heating plants that are connected by means of production processes in which it is produced electrical and thermal energy. This is why HEP is a very important part of the Croatian economy. The goal of company is to be the energy leader in the region.