Contrasting Developments in UK Energy Regulation: Retail Policy and Consumer Engagement

This article explores the role of regulation as a supporting institution for an energy market. Two aspects are examined: first, the role of regulation in promoting a competitive market for the retail supply of energy, and second, the role of regulation in providing access to the transmission and distribution networks, assumed to be monopolies, that provide services for the retail suppliers. UK regulation promoted retail energy competition until 2008, but in that year changed direction, and since then has been restricting retail competition. In contrast, UK regulation since 2008 has encouraged more customer engagement in the network part of the energy sector. This offers the prospect, at least, of the emergence of a form of competition and choice in the process of setting price controls.     

The structure of telephone tariffs

This paper compares the structure of telephone tariffs adopted by three types of organisation: government-owned systems responsible for both posts and telephones, government-owned systems responsible for telephones alone, and privately-owned telephone systems. It is found that privately-owned systems are significantly more likely to adopt three or more peak-load pricing periods. They are also more likely to differentiate tariffs by category of subscriber, and to offer lower rates for shared lines, but these differences are only significant if private telephone systems are compared with government systems responsible for both posts and telephones. Postal responsibility alone has little or no effect on these aspects of tariffs. The paper thus provides limited support for the view that ownership systematically affects behaviour.     

The effect of ownership on telephone penetration

It is well known that telephone penetration (the number of telephones per 100 population) is strongly related to national income. This report examines whether telephone penetration is significantly influenced by type of ownership (ie whether the telephone system is owned and operated by a private company or a government organization) and by postal responsibility (ie whether the telephone system is run by the same organization which runs the postal system). Economic theory and evidence from other industries suggest that private ownership increases output, and one might guess that postal responsibility would tend to restrict telephone penetration - but are these hypotheses correct and are the effects significant? The author concludes that telephone penetration is significantly more responsive to per capita GDP and to population density in private systems than in government-owned systems. Joint responsibility for postal systems has no significant effect on telephone penetration.     

Promoting competition and protecting customers? Regulation of the GB retail energy market 2008–2016

Journal of Regulatory Economics - In 1999 the GB retail energy market was open to competition for residential customers. In 2008 Ofgem began a series of regulatory interventions, notably a...     

Municipal aggregation and retail competition in the Ohio energy sector

Ohio allows communities to vote to aggregate the loads of individual consumers (unless they opt out) in order to seek a competitive energy supplier. Over 200 communities have voted to do this for electricity. By 2004 residential switching reached 69% in Cleveland territory (95% from municipal aggregation) but by 2006 had fallen to 8%. Savings are now small, but customer acquisition costs are low and the cost to consumers is negligible. Aggregation and retail competition have been thwarted by Rate Stabilization Plans holding incumbent utility prices below cost since 2006. In the Ohio gas sector, rate regulation has not discouraged aggregation and competition, but market prices falling below municipally negotiated rates can be politically embarrassing. Municipal aggregation thus works when conditions allow it, and enhances competition. How it would fare against individual choice in a market conducive to retail competition remains an open question.      

PRIVATISATION,COMPETITION AND REGULATION IN THE SCOTTISH ELECTRICITY INDUSTRY†

This paper analyses the experience of the privatised electricity industry in Scotland. The retention of vertical integration in Scotland has led to a number of different features in the regulation of the industry in Scotland and England and Wales. It has also led to a different pattern of development of competition. Although regulation and price competition appear to have operated to the benefit of consumers thus far, the Scottish system is as yet untested in its ability to cope with significant new entry.