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Evaluating the British Model of Electricity Deregulation

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  • Stephen Thomas

Abstract

**: A key aspect of the 1990 reforms to the British electricity supply industry was the introduction of a formal system of regulation by an autonomous regulatory body. It was expected that replacement of monopolies in some areas by markets and price‐setting in monopoly areas using a simple incentive formula would mean that regulation of the industry would be ‘light’. This article examines how regulation has turned out in practice. It concludes that the promise of ‘light’ regulation has not been fulfilled. Regulation of competitive markets is a major regulatory activity, incentive regulation has evolved into a complex and intrusive form of rate‐of‐return, while regulation of industry structure has allowed the industry to descend into a concentrated, vertically integrated structure, at odds with the aims of the reforms.

Suggested Citation

  • Stephen Thomas, 2004. "Evaluating the British Model of Electricity Deregulation," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 75(3), pages 367-398, September.
    • Handle: RePEc:bla:annpce:v:75:y:2004:i:3:p:367-398
    DOI: 10.1111/j.1467-8292.2004.00256.x
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    References listed on IDEAS

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    1. Kevin Jewell, 2004. "Manipulated, Misled, Ignored, Abused: Residential Consumer Experience with Electric Deregulation in the United Kingdom," Public Economics 0401005, University Library of Munich, Germany.
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    4. Thomas, Steve, 2003. "The Seven Brothers," Energy Policy, Elsevier, vol. 31(5), pages 393-403, April.
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    1. Pittman, Russell, 2007. "Restructuring the Russian electricity sector: Re-creating California?," Energy Policy, Elsevier, vol. 35(3), pages 1872-1883, March.
    2. Jamasb, Tooraj, 2006. "Between the state and market: Electricity sector reform in developing countries," Utilities Policy, Elsevier, vol. 14(1), pages 14-30, March.
    3. Du, Limin & Mao, Jie & Shi, Jinchuan, 2009. "Assessing the impact of regulatory reforms on China's electricity generation industry," Energy Policy, Elsevier, vol. 37(2), pages 712-720, February.
    4. Ugur, Mehmet, 2009. "Liberalisation in a world of second best: evidence on European network industries," MPRA Paper 17873, University Library of Munich, Germany, revised 13 Oct 2009.
    5. Erdogdu, Erkan, 2010. "Electricity Market Reform: Lessons for developing countries," MPRA Paper 27317, University Library of Munich, Germany.
    6. Erdogdu, Erkan, 2013. "Essays on Electricity Market Reforms: A Cross-Country Applied Approach," MPRA Paper 47139, University Library of Munich, Germany.
    7. Richard Meade & Seini O’Connor, 2011. "Comparison of Long-term Contracts and Vertical Integration in Decentralized Electricity Markets," Chapters, in: Jean-Michel Glachant & Dominique Finon & Adrien de Hauteclocque (ed.), Competition, Contracts and Electricity Markets, chapter 4, Edward Elgar Publishing.
    8. Lehtonen, Markku & Nye, Sheridan, 2009. "History of electricity network control and distributed generation in the UK and Western Denmark," Energy Policy, Elsevier, vol. 37(6), pages 2338-2345, June.
    9. Weigt, Hannes, 2009. "A Review of Liberalization and Modeling of Electricity Markets," MPRA Paper 65651, University Library of Munich, Germany.
    10. Jamasb, Tooraj & Pollitt, Michael, 2007. "Incentive regulation of electricity distribution networks: Lessons of experience from Britain," Energy Policy, Elsevier, vol. 35(12), pages 6163-6187, December.
    11. Stephen D. Thomas, 2012. "Not Too Smart an Innovation: Britain's Plans to Switch Consumers to Smart Electricity and Gas Meters," Energy & Environment, , vol. 23(6-7), pages 1057-1074, October.
    12. Fu, Tong & Jian, Ze, 2020. "A developmental state: How to allocate electricity efficiently in a developing country," Energy Policy, Elsevier, vol. 138(C).

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