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The Consequences for Consumer Welfare of the 2001-2003 Electricity Distribution Price Review in The Netherlands

Author

Listed:
  • Paul H. L. Nillesen

    (Corporate Finance & Recovery PricewaterhouseCoopers De Entree 201 Amsterdam, The Netherlands)

  • Michael G. Pollitt

    (Business Economics Judge Institute of Management Cambridge)

Abstract

The Dutch regulatory process for setting the first X-Factors in the electricity distribution sector has gone badly wrong. During two-and-a-half years four different X-Factors were published by the regulator. These X-Factors fluctuated wildly. We demonstrate that Dutch electricity consumers will pay at least €300mln. more over three years for the distribution of electricity than might otherwise have been the case. We estimate that benefits for companies in terms of extra revenue from lowered X-Factors amounts to 3~5 percent of total asset value. We provide a history of the regulatory process and analyse the impact of the different X-Factors on the final bills of consumers. The negative political reaction to the perceived problems of regulation has hampered the course of deregulation and the privatisation of the municipally-owned electricity companies. The Minister of Economic Affairs and the majority of Parliament want the complete ownership unbundling of the sector by 1 January 2007.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Paul H. L. Nillesen & Michael G. Pollitt, 2004. "The Consequences for Consumer Welfare of the 2001-2003 Electricity Distribution Price Review in The Netherlands," Working Papers EP50, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    • Handle: RePEc:enp:wpaper:ep50
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    Citations

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    Cited by:

    1. Brunekreeft, G. & McDaniel, T., 2005. "Policy uncertainty and supply adequacy in electric power," Discussion Paper 2005-006, Tilburg University, Tilburg Law and Economic Center.
    2. Mehdi Farsi & Aurelio Fetz & Massimo Filippini, 2007. "Benchmarking and Regulation in the Electricity Distribution Sector," CEPE Working paper series 07-54, CEPE Center for Energy Policy and Economics, ETH Zurich.
    3. Mehdi Farsi & Massimo Filippini & William Greene, 2006. "Application Of Panel Data Models In Benchmarking Analysis Of The Electricity Distribution Sector," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 77(3), pages 271-290, September.
    4. 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.
    5. Eva Niesten, 2010. "Identifying options for regulating the coordination of network investments with investments in distributed electricity generation," CPB Discussion Paper 141, CPB Netherlands Bureau for Economic Policy Analysis.

    More about this item

    Keywords

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    JEL classification:

    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L98 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Government Policy

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