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Manipulated, Misled, Ignored, Abused: Residential Consumer Experience with Electric Deregulation in the United Kingdom

Author

Listed:
  • Kevin Jewell

    (PSIRU & Consumers Union)

Abstract

The United Kingdom began deregulating its electric market years before the U.S. Thus, the UK provides the best example of what can be expected in the deregulated residential retail electric market in the United States. . An extensive review of the evidence found: Questionable price savings: Large drops in wholesale market prices were not fully passed on to residential consumers in the deregulated marketplace. Increase in complaints: The volume of complaints about energy companies jumped after deregulation, and new types of complaints such as unauthorized switching of service (“slamming”) arose. Failure of Competition to Develop: Rather than compete for new customers, companies are relying on customer inertia to keep their existing customer base. Higher prices for low- income consumers: Since deregulation begain in 1990, there has been a marked increase in the use of prepayment meters, resulting in low-income customers paying more for their electricity. These findings lead us to recommend against implementing plans to replace traditional regulation with “retail competition” for consumers. Where a state or country has already enacted such a plan, it should be prepared to address and remedy each of the problems identified above.

Suggested Citation

  • 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.
  • Handle: RePEc:wpa:wuwppe:0401005
    Note: Type of Document - pdf; prepared on Win98; pages: 14
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    Citations

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    Cited by:

    1. Thomas, Steve, 2006. "The British Model in Britain: Failing slowly," Energy Policy, Elsevier, vol. 34(5), pages 583-600, March.
    2. 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.

    More about this item

    Keywords

    Electricity Markets; Deregulation; United Kingdom; Energy Markets; privitization; privitisation; low-income consumers;
    All these keywords.

    JEL classification:

    • D6 - Microeconomics - - Welfare Economics
    • D7 - Microeconomics - - Analysis of Collective Decision-Making
    • H - Public Economics
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • L95 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Gas Utilities; Pipelines; Water Utilities
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices

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