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Competition in electricity supply: will ‘1998’ Be worth it?

Author

Listed:
  • Richard Green
  • Tanga McDaniel

Abstract

Starting in 1998, the electricity market in England and Wales will be opened up to full competition,and all consumers will be allowed to choose their electricity supplier. This promises to result in lower prices, but there will be additional transactions costs exceeding £100 million a year for the first five years. Relative to a counterfactual without competition, there are likely to be large transfers from electricity companies (and the coal industry) to consumers, but the companies lose more than consumers gain. This conclusion might be reversed if competitive pressure leads to significant additional cost savings in the future.

Suggested Citation

  • Richard Green & Tanga McDaniel, 1998. "Competition in electricity supply: will ‘1998’ Be worth it?," Fiscal Studies, Institute for Fiscal Studies, vol. 19(3), pages 273-293, August.
  • Handle: RePEc:ifs:fistud:v:19:y:1998:i:3:p:273-293
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    File URL: http://www.ifs.org.uk/fs/articles/green_aug98.pdf
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    References listed on IDEAS

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    1. Newbery, David M & Pollitt, Michael G, 1997. "The Restructuring and Privatization of Britain's CEGB--Was It Worth It?," Journal of Industrial Economics, Wiley Blackwell, vol. 45(3), pages 269-303, September.
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    Cited by:

    1. Riechmann, Christoph, 2000. "Strategic pricing of grid access under partial price-caps -- electricity distribution in England and Wales," Energy Economics, Elsevier, vol. 22(2), pages 187-207, April.
    2. Nils-Henrik M. von der Fehr & Petter Vegard Hansen, 2010. "Electricity Retailing in Norway," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 25-46.
    3. Pollitt, Michael, 2009. "Evaluating the evidence on electricity reform: Lessons for the South East Europe (SEE) market," Utilities Policy, Elsevier, vol. 17(1), pages 13-23, March.
    4. Preetum Domah & Michael G. Pollitt, 2001. "The restructuring and privatisation of the electricity distribution and supply businesses in England," Fiscal Studies, Institute for Fiscal Studies, vol. 22(1), pages 107-146, March.
    5. Gaffney, F. & Deane, J.P. & Gallachóir, B.P.Ó, 2017. "A 100 year review of electricity policy in Ireland (1916–2015)," Energy Policy, Elsevier, vol. 105(C), pages 67-79.
    6. repec:kap:empiri:v:44:y:2017:i:2:d:10.1007_s10663-016-9318-6 is not listed on IDEAS
    7. David Newbery, 2004. "Privatising Network Industries," CESifo Working Paper Series 1132, CESifo Group Munich.
    8. Elbia Vinhaes, 2003. "Estrutura de Governança e Comportamento Estratégico em Sistemas Elétricos Reestruturados: uma Abordagem Institucional do Poder de Mercado na Indústria de Energia Elétrica Brasileira," Anais do XXXI Encontro Nacional de Economia [Proceedings of the 31st Brazilian Economics Meeting] d09, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].
    9. Newbery, David M., 1998. "The regulator's review of the English Electricity Pool," Utilities Policy, Elsevier, vol. 7(3), pages 129-141, November.
    10. Thomas, Steve, 2006. "The British Model in Britain: Failing slowly," Energy Policy, Elsevier, vol. 34(5), pages 583-600, March.
    11. Mota, R.L., 2003. "The Restructuring and Privatisation of Electricity Distribution and Supply Business in Brazil: A Social Cost-Benefit Analysis," Cambridge Working Papers in Economics 0309, Faculty of Economics, University of Cambridge.
    12. David Hawdon & Lester C. Hunt & Paul Levine & Neil Rickman, 2007. "Optimal sliding scale regulation: an application to regional electricity distribution in England and Wales," Oxford Economic Papers, Oxford University Press, vol. 59(3), pages 458-485, July.
    13. Waddams Price, Catherine & Bennett, Matthew, 1999. "New gas in old pipes: opening the UK residential gas market to competition," Utilities Policy, Elsevier, vol. 8(1), pages 1-15, March.
    14. Wolf, C. & Pollitt, M.G., 2009. "The Welfare Implications of Oil Privatisation: A Cost-Benefit Analysis of Norway’s Statoil," Cambridge Working Papers in Economics 0912, Faculty of Economics, University of Cambridge.
    15. David M Newbery, 2002. "Regulating Unbundled Network Utilities," The Economic and Social Review, Economic and Social Studies, vol. 33(1), pages 23-41.
    16. Littlechild, Stephen, 2006. "Competition and contracts in the Nordic residential electricity markets," Utilities Policy, Elsevier, vol. 14(3), pages 135-147, September.
    17. Woo, Chi-Keung & Lloyd, Debra & Tishler, Asher, 2003. "Electricity market reform failures: UK, Norway, Alberta and California," Energy Policy, Elsevier, vol. 31(11), pages 1103-1115, September.
    18. Tishler, A. & Newman, J. & Spekterman, I. & Woo, C.K., 2006. "Cost-benefit analysis of reforming Israel's electricity industry," Energy Policy, Elsevier, vol. 34(16), pages 2442-2454, November.
    19. Newbery, D., 2002. "Issues and Options for Restructuring Electricity Supply Industries," Cambridge Working Papers in Economics 0210, Faculty of Economics, University of Cambridge.
    20. Tishler, A. & Newman, J. & Spekterman, I. & Woo, C.K., 2008. "Assessing the options for a competitive electricity market in Israel," Utilities Policy, Elsevier, vol. 16(1), pages 21-29, March.
    21. Littlechild Stephen C., 2002. "Competition in Retail Electricity Supply," Journal des Economistes et des Etudes Humaines, De Gruyter, vol. 12(2), pages 1-26, June.
    22. repec:eee:juipol:v:49:y:2017:i:c:p:72-92 is not listed on IDEAS
    23. Boroumand, Raphaël Homayoun, 2015. "Electricity markets and oligopolistic behaviors: The impact of a multimarket structure," Research in International Business and Finance, Elsevier, vol. 33(C), pages 319-333.
    24. Newbery, D., 2002. "Regulatory Challenges to European Electricity Liberalisation," Cambridge Working Papers in Economics 0230, Faculty of Economics, University of Cambridge.
    25. Hauch, Jens, 2001. "The Danish electricity reform," Energy Policy, Elsevier, vol. 29(7), pages 509-521, June.

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    JEL classification:

    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities

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