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Competition in European Electricity Markets

Competition in European Electricity Markets

A Cross-country Comparison

Edited by Jean-Michael Glachant and Dominique Finon

This book focuses on the diversity of electricity reforms in Western Europe, drawing evidence from ten European Union memberstates plus Norway and Switzerland as associate members. The contributors analyse the various ways of introducing competition in the European electricity industries, and consider both the strategies of electricity companies and their behaviour in electricity marketplaces. They also offer an explanation of the differences of reforms by the institutions and the industrial structures of each country which shape the types of marketrules, industrial restructuring and public service regulations which have been adopted.

Chapter 2: Electricity in England and Wales: Efficiency and Equity

Gordon MacKerron

Subjects: economics and finance, competition policy, energy economics, industrial organisation


2. Electricity in England and Wales: efficiency and equity Gordon MacKerron INTRODUCTION This chapter looks at the experience of the UK electricity supply industry since 1990 and asks questions about its future evolution. The industry has been in a process of almost continuous reinvention ever since the large structural changes of 1990. In the later 1990s and 2000 there have also been modifications to the original policy objectives, which were mostly concerned with promoting economic efficiency. Greater attention to objectives of equity and environmental protection has been characteristic of the late 1990s, and a major reform of the wholesale trading system took place in April 2001. An important part of the forward look in this chapter is, therefore, to examine the ways in which these new developments, especially potential conflicts between efficiency and equity, may play out in the future. The wider significance of the changes in the UK has not been that they were either the first or, in all areas, the most radical. They were certainly radical enough in relation to past European practice. But their significance is also that they have been extremely influential in shaping reform processes elsewhere, including the European Union. Beyond Western Europe, places as diverse as Colombia, Ukraine and Orissa (India) have been deeply influenced by the ‘UK’ model, especially via the strong British consultancy industry. The successes and failures of the English experience are therefore of special international significance. BACKGROUND: THE SHAPE...

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