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The Electricity Industry Reform Paradigm in the European Union: Testing the Impact on Consumers

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Author Info

  • Carlo Fiorio

    (University of Milan)

  • Massimo Florio

    (University of Milan)

  • Raffaele Doronzo

    (University of Milan)

Abstract

The standard electricity industry reform paradigm in several EU countries since the 1990s includes privatization, unbundling, liberalization. While the implementation and design of reforms widely differs across the EU, the European Commission insists on a rather unified approach, aiming at the full opening of the internal market. Privatization neither is a necessary pre-requisite of liberalization, nor it is mentioned in the EU electricity market directives. Many economists, however, believe that public ownership can be an impediment to other reforms, and that it leads to production inefficiency. To test the latter question and the reform paradigm in general, as captured by the regulatory indicators, we consider electricity prices and survey data on consumer satisfaction in the EU-15. Our empirical findings reject the prediction that privatization leads to lower prices, or to increased consumer satisfaction. Moreover, country specific features tend to have a high explanatory power, and the progress toward the reform paradigm is not systematically associated with lower prices and higher consumers satisfaction. We discuss possible interpretations of our findings, suggest possible explanations, and some policy implications.

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Bibliographic Info

Paper provided by Universitá degli Studi di Milano in its series UNIMI - Research Papers in Economics, Business, and Statistics with number unimi-1066.

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Date of creation: 04 Dec 2007
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Handle: RePEc:bep:unimip:unimi-1066

Note: oai:cdlib1:unimi-1066
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Keywords: Electricity industry; privatization; liberalization; unbundling;

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Cited by:
  1. Pompei, Fabrizio, 2013. "Heterogeneous effects of regulation on the efficiency of the electricity industry across European Union countries," Energy Economics, Elsevier, vol. 40(C), pages 569-585.
  2. Daisy Shen & Qing Yang, . "Electricity Market Regulatory Reform and Competition – Case Study of the New Zealand Electricity Market," Chapters, Economic Research Institute for ASEAN and East Asia (ERIA).
  3. Pollitt, M., 2007. "Evaluating the evidence on electricity reform: Lessons for the South East Europe (SEE) market," Cambridge Working Papers in Economics 0756, Faculty of Economics, University of Cambridge.
  4. Erdogdu, Erkan, 2010. "Electricity Market Reform: Lessons for developing countries," MPRA Paper 27317, University Library of Munich, Germany.
  5. Erkan, Erdogdu, 2011. "What happened to efficiency in electricity industries after reforms?," Energy Policy, Elsevier, vol. 39(10), pages 6551-6560, October.
  6. Erdogdu, Erkan, 2011. "The impact of power market reforms on electricity price-cost margins and cross-subsidy levels: A cross country panel data analysis," Energy Policy, Elsevier, vol. 39(3), pages 1080-1092, March.
  7. Erdogdu, Erkan, 2013. "Essays on Electricity Market Reforms: A Cross-Country Applied Approach," MPRA Paper 47139, University Library of Munich, Germany.

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