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

Author

Listed:
  • 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.

Suggested Citation

  • Carlo Fiorio & Massimo Florio & Raffaele Doronzo, 2007. "The Electricity Industry Reform Paradigm in the European Union: Testing the Impact on Consumers," UNIMI - Research Papers in Economics, Business, and Statistics unimi-1066, Universitá degli Studi di Milano.
  • Handle: RePEc:bep:unimip:unimi-1066
    Note: oai:cdlib1:unimi-1066
    as

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    Cited by:

    1. repec:eee:enepol:v:107:y:2017:i:c:p:258-277 is not listed on IDEAS
    2. 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.
    3. Bacchiocchi, Emanuele & Florio, Massimo & Taveggia, Giulia, 2015. "Asymmetric effects of electricity regulatory reforms in the EU15 and in the New Member States: Empirical evidence from residential prices 1990–2011," Utilities Policy, Elsevier, vol. 35(C), pages 72-90.
    4. 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.
    5. Erkan, Erdogdu, 2011. "What happened to efficiency in electricity industries after reforms?," Energy Policy, Elsevier, vol. 39(10), pages 6551-6560, October.
    6. Poggi, Ambra & Florio, Massimo, 2010. "Energy deprivation dynamics and regulatory reforms in Europe: Evidence from household panel data," Energy Policy, Elsevier, vol. 38(1), pages 253-264, January.
    7. Nikogosian, Vigen & Veith, Tobias, 2012. "The impact of ownership on price-setting in retail-energy markets—The German case," Energy Policy, Elsevier, vol. 41(C), pages 161-172.
    8. Erdogdu, Erkan, 2013. "Essays on Electricity Market Reforms: A Cross-Country Applied Approach," MPRA Paper 47139, University Library of Munich, Germany.
    9. Polemis, Michael L., 2016. "New evidence on the impact of structural reforms on electricity sector performance," Energy Policy, Elsevier, vol. 92(C), pages 420-431.
    10. repec:eee:eneeco:v:66:y:2017:i:c:p:99-107 is not listed on IDEAS
    11. 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).
    12. Erdogdu, Erkan, 2014. "Investment, security of supply and sustainability in the aftermath of three decades of power sector reform," Renewable and Sustainable Energy Reviews, Elsevier, vol. 31(C), pages 1-8.
    13. 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.
    14. Nela Vlahinić, 2014. "Energy Market Reforms In Croatia: Challenges And Perspectives," Economy & Business Journal, International Scientific Publications, Bulgaria, vol. 8(1), pages 111-123.
    15. repec:aen:journl:ej38-3-stengos is not listed on IDEAS

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