The Reform of Network Industries
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The Reform of Network Industries

Evaluating Privatisation, Regulation and Liberalisation in the EU

Edited by Massimo Florio

Network industries such as electricity, gas, rail, local public transport, telecommunications and postal services are recognised by the EU as crucial for fostering European social and territorial cohesion. Providing an overview of key policy reforms in these industries and an empirical evaluation, this thought-provoking book offers a critical perspective on the functioning of the networks that provide vital services to EU citizens.
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Chapter 7: Does public ownership provide affordable and reliable electricity to household customers? Case studies of electricity sector reforms in the UK, France, Germany and Italy

Ajla Cosic, Lea Diestelmeier, Alexandru Maxim, Tue Anh Nguyen and Nicolò Rossetto

Abstract

Over the last three decades, in order to solve issues related to economic efficiency and under-investment, many European countries have opted for the liberalization of the electricity sector. This was generally coupled with a progressive breakup and privatization of vertically integrated national monopolies. This chapter seeks to assess whether these reforms have generated welfare benefits for household consumers within the European Union. After reviews of national reforms, we investigate the relationship between public ownership of electricity companies and measurements of affordability and reliability of service. The pattern of these measurements through time is analysed across four countries: France, Germany, Italy and the United Kingdom, all of which have pursued different pathways in restructuring their electricity sectors. Our study shows that privatisation and liberalisation have not had a consistently positive impact on household customers. Even though the data suggest that consumer welfare may have improved in the beginning of the millennium, subsequent developments cast doubts that ownership transfers from public to private entities are causally linked to such improvements.

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