England and Wales' Electricity Industry: Experience in Deregulation 1999

A. Odubiyi (UK) and I. E. Davidson (South Africa)


Electricity deregulation, restructuring, market design


Electric utilities have traditionally operated as government monopoly institutions in vertically integrated structures. As monopolies, secondary costs incurred as a result of inefficient operations are passed down to consumers, even when such did not constitute major operational or quality of supply problems. In the last decade, environmental issues, regulatory and economic challenges, and changing public perception have created a radically different world for electric utilities. Consumers demand price transparency and reduction of cross subsidies among different users. There is also a need for higher energy efficiency in technical systems of utilities and significant growth in energy demand. Governments are under pressure to raise funds for social services, balance budgets and to carry out economic reform. This paper presents ten years experience regarding the successful deregulation of the electricity supply industry in England and Wales.

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