The Governance of Network Industries

The Governance of Network Industries

Institutions, Technology and Policy in Reregulated Infrastructures

Studies in Evolutionary Political Economy series

Edited by Rolf W. Kunneke, John Groenewegen and Jean-François Auger

Infrastructures are subject to substantial readjustments of governance structures, often labeled as liberalization, privatization or re-regulation. This affects all traditional infrastructure sectors including communications, energy, transport and water. This study highlights and illustrates some of the major challenges for readjusting the governance of network industries from an economic, institutional, political and technological perspective. The three parts of the book address the institutional design of infrastructures, the role of technology in different sectors and actor behaviour.

Chapter 7: Changing Paradigms in Electric Energy Systems

Marija Ilic and Mariann Jelinek

Subjects: economics and finance, industrial economics, institutional economics, public sector economics


Maria Ilić and Mariann Jelinek1 INTRODUCTION The electric power industry is facing a problem that, if it is not solved, will become worse over time and generate huge difficulties. The specifics of the problem are as yet unclear. The problem is suffused with ambiguity, multiple different definitions and numerous insistent stakeholders pushing their particular viewpoints. In fact, the industry faces a difficult problem or, more accurately, a difficult environment. This problem is simultaneously more complex than the existing technical paradigm can manage; more complex than the existing regulatory regime can comprehend; and now includes many former externalities that must be embraced. Externalities refer to factors formerly ignored or excluded from the paradigm-in-use, by which those concerned with the industry made sense of their environment. Among the former externalities that can no longer be simply ignored are questions such as capacity levels and growth plans, energy use and environmental sustainability, allocation of resources to use, environmental pollution concerns, and the temporal and locational questions of power supply. Externalities gain prominence only rarely in an industry, typically in the context of some crisis that forces a shift in attention, such as a major disaster like Three Mile Island or poorly functioning deregulation.2 Deregulation removes the rigid barriers or requirements of the past, undercutting the dominance of long stable technologies and analytical techniques. Political forces or technologies once safely ignored rise to critical prominence, and new potential competitors appear. Because they were excluded from prior understanding of the relevant factors affecting industry, such...

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