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The British model in Britain: failing slowly

The British model in Britain: failing slowly

Thomas, Stephen (2004) The British model in Britain: failing slowly. Discussion Paper. PSIRU, London, UK.

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Abstract

In 1990, Britain became the first developed country to reorganise its electricity industry to run on competitive lines. The British reforms are widely regarded as the benchmark for other reforms and the model used provides the basis for reforms of electricity and other network industries around the world. The factors behind this perception of success are major reductions in the real price of electricity with no apparent reduction in service quality. This paper examines whether the high reputation of the British reforms is justified and whether these good results can be maintained. It concludes that the reputation is not justified and that serious problems are beginning to emerge.

The central question that must be asked is: have the British reforms resulted in the creation of efficient markets at the wholesale and retail level? On this criterion, the reforms have failed. The wholesale market remains illusory. Obscure long-term contracts, privileged access to the market and self-dealing within integrated generator/retailers have dominated wholesale purchases leaving the spot markets with minimal liquidity and unreliable prices. The failure to develop an efficient wholesale market places the onus on consumers to impose competitive forces on electricity companies by switching regularly. Small consumers will not do this and they are paying too much for their power. For the future, there is a serious risk that the electricity industry will become a weakly regulated oligopoly with a veneer of competition.

Item Type: Monograph (Discussion Paper)
Additional Information: Paper presented at International Workshop on: "Thirty Years of World Energy Policy – cum – Editorial Board Meeting of Energy Policy". Hong Kong Energy Studies Centre & Department of Geography, Hong Kong Baptist University, 23–25 March 2004
Uncontrolled Keywords: energy, energy reforms, electricity, liberalisation, privatisation, UK, Britain
Subjects: T Technology > TK Electrical engineering. Electronics Nuclear engineering
H Social Sciences > HB Economic Theory
Faculty / Department / Research Group: Faculty of Business > Department of International Business & Economics
Faculty of Business > Public Services International Research Unit (PSIRU)
Faculty of Business > Centre for Work and Employment Research (CREW) > Public Services International Research Unit (PSIRU)
Related URLs:
Last Modified: 14 Oct 2016 09:09
Selected for GREAT 2016: None
Selected for GREAT 2017: None
Selected for GREAT 2018: None
Selected for GREAT 2019: None
URI: http://gala.gre.ac.uk/id/eprint/3757

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