Deregulating UK Gas and Electricity Markets: How is Competition Working for Residential Consumers?

April 15, 2003 - 12:00pm
Bldg. 90
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Retail gas and electricity prices were deregulated in the UK in April 2002, following introduction of retail choice for residential consumers between 1996 and 1999.  We use information from consumer surveys, including a panel survey over three years, to analyse consumer attitudes and behaviour.  In particular we explore how awareness changed, whether those who were actively considering switching in one wave of the survey had actually done so by the next round, whether individuals become willing to switch for smaller price gains as the markets matured, and how expectations about the likelihood of the incumbent to match entrants' prices changed in the early years of the competitive market.  Our findings have direct implications for the continuing market power of the incumbent to maintain prices above costs, and for the appropriate policy to protect consumers, particularly those for whom the regulator has a specific responsibility.  --Catherine Waddams is Director of the Centre for Competition and Regulation at the University of East Anglia, and was formerly founding Director of the Centre for Management under Regulation at the University of Warwick and Dean of the Faculty of Social Sciences at the University of Leicester.  Her research has focused on the economics of formerly nationalized utilities, particularly energy, and she is particularly interested in the distributional effect of utility reform both in the UK and in other countries.  Current projects include estimating the distribution of and aggregate welfare benefits in newly competitive residential retail energy markets, the effects of economic regulation on quality of service and the evolution of tariff structures in the gas and electricity markets.  Catherine has advised economic regulators in the UK and the gas regulator in Argentina, and has advised and taught for the World Bank.  She is a reporting member of the UK Competition Commission.

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