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Competition and contracts in the Nordic Residential Electricity Markets

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  • Littlechild, S.

Abstract

The main Nordic residential electricity markets (Norway, Sweden and Finland) effectively opened to retail competition around 1998. They have not been subject to regulatory controls on prices or other contract terms. Between 11 and 29 per cent of residential customers have switched suppliers and between a fifth and a half of all residential customers have chosen alternative contractual terms of supply. These alternatives include fixed price contracts ranging from 3 months to five years duration, as well as spot-price related terms, instead of the standard variable tariffs. The use of these alternatives is increasing over time, and there is considerable product innovation. This paper surveys these developments and illustrates with case studies of significant suppliers in each Nordic market. The market is thus ascertaining and bringing about the outcomes that customers prefer. Without retail competition, it is not clear how regulation will replicate this aspect of the market process.

Suggested Citation

  • Littlechild, S., 2005. "Competition and contracts in the Nordic Residential Electricity Markets," Cambridge Working Papers in Economics 0550, Faculty of Economics, University of Cambridge.
  • Handle: RePEc:cam:camdae:0550
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    File URL: http://www.electricitypolicy.org.uk/pubs/wp/eprg0506.pdf
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    References listed on IDEAS

    as
    1. 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.
    2. Nils-Henrik M. von der Fehr, Eirik S. Amundsen and Lars Bergman, 2005. "The Nordic Market: Signs of Stress?," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 71-98.
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    9. Stephen C. Littlechild, 2001. "Competition And Regulation In The U.K. Electricity Industry (With A Brief Look At California)," Journal of Applied Corporate Finance, Morgan Stanley, vol. 13(4), pages 21-38.
    10. Littlechild, Stephen, 2006. "Residential energy contracts and the 28 day rule," Utilities Policy, Elsevier, vol. 14(1), pages 44-62, March.
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    12. repec:spo:wpecon:info:hdl:2441/7189 is not listed on IDEAS
    13. Ole Jess Olsen & Klaus Skytte, 2003. "Competition and Market Power in Northern Europe," Chapters,in: Competition in European Electricity Markets, chapter 7 Edward Elgar Publishing.
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    Citations

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    Cited by:

    1. Vesterberg, Mattias, 2017. "The effect of price on electricity contract choice," Umeå Economic Studies 941, Umeå University, Department of Economics.
    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. repec:eee:eneeco:v:69:y:2018:i:c:p:59-70 is not listed on IDEAS
    4. Dominique Finon, 2008. "Investment risk allocation in decentralised electricity markets. The need of long-term contracts and vertical integration," OPEC Energy Review, Organization of the Petroleum Exporting Countries, vol. 32(2), pages 150-183, June.
    5. Costa-Campi, M.T. & Duch-Brown, N. & García-Quevedo, J., 2014. "R&D drivers and obstacles to innovation in the energy industry," Energy Economics, Elsevier, vol. 46(C), pages 20-30.
    6. Hanimann, Raphael & Vinterbäck, Johan & Mark-Herbert, Cecilia, 2015. "Consumer behavior in renewable electricity: Can branding in accordance with identity signaling increase demand for renewable electricity and strengthen supplier brands?," Energy Policy, Elsevier, vol. 78(C), pages 11-21.
    7. Lanot, Gauthier & Vesterberg, Mattias, 2017. "An empirical model of the decision to switch between electricity price contracts," Umeå Economic Studies 951, Umeå University, Department of Economics.
    8. Stephen Littlechild, 2008. "Municipal aggregation and retail competition in the Ohio energy sector," Journal of Regulatory Economics, Springer, vol. 34(2), pages 164-194, October.
    9. Dominique Finon, 2011. "Investment and Competition in Decentralized Electricity Markets: How to Overcome Market Failure by Market Imperfections?," Chapters,in: Competition, Contracts and Electricity Markets, chapter 3 Edward Elgar Publishing.
    10. Poupeau, François-Mathieu, 2009. "Domestic customers and reform of the gas sector. An organisational sociology perspective," Energy Policy, Elsevier, vol. 37(12), pages 5385-5392, December.
    11. Johnsen, Tor Arnt & Olsen, Ole Jess, 2011. "Regulated and unregulated Nordic retail prices," Energy Policy, Elsevier, vol. 39(6), pages 3337-3345, June.
    12. Danias, Nikolaos & Kim Swales, John & McGregor, Peter, 2013. "The Greek Electricity Market Reforms: Political and Regulatory Considerations," Energy Policy, Elsevier, vol. 62(C), pages 1040-1047.
    13. Arango, Santiago & Larsen, Erik, 2011. "Cycles in deregulated electricity markets: Empirical evidence from two decades," Energy Policy, Elsevier, vol. 39(5), pages 2457-2466, May.
    14. Mirza, Faisal Mehmood & Bergland, Olvar, 2012. "Pass-through of wholesale price to the end user retail price in the Norwegian electricity market," Energy Economics, Elsevier, vol. 34(6), pages 2003-2012.
    15. Defeuilley, Christophe, 2009. "Retail competition in electricity markets," Energy Policy, Elsevier, vol. 37(2), pages 377-386, February.
    16. repec:eee:juipol:v:49:y:2017:i:c:p:72-92 is not listed on IDEAS
    17. 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.
    18. Erdogdu, Erkan, 2013. "Essays on Electricity Market Reforms: A Cross-Country Applied Approach," MPRA Paper 47139, University Library of Munich, Germany.
    19. Lehto, Eero, 2011. "Electricity prices in the Finnish retail market," Energy Policy, Elsevier, vol. 39(4), pages 2179-2192, April.
    20. Torstein Bye & Petter Vegard Hansen, 2008. "How do Spot prices affect aggregate electricity demand?," Discussion Papers 527, Statistics Norway, Research Department.
    21. Vesterberg, Mattias, 2017. "Power to the people: Electricity demand and household behavior," Umeå Economic Studies 942, Umeå University, Department of Economics.

    More about this item

    Keywords

    retail competition; electricity; regulation; Nordic countries;

    JEL classification:

    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

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