How Do Network Companies Seek Legitimacy for Public Value Trade Offs?

Bauke Steenhuisen and Mark de Bruijne

Competition and Regulation in Network Industries, 2016, vol. 17, issue 2, 181-201

Abstract: Network companies fulfill a critical role in the energy transition. This article provides an empirical study of this role of a Dutch national gas network company connecting a biogas producer. This project requires choices about many intertwined technical and institutional variables. Choices involve multiple, potentially competing public values like safety, cost-efficiency, sustainability and non-discrimination. A formal governance structure provides generic guidelines for network companies about how to act in the public interest, but we argue that unclarity remains on how to trade-off public values. In these instances, a network company seeks legitimacy for the choices that are made. Via an in-depth case study on the injection of biogas we explored how a network company interpreted its public role and how public value trade-offs were made. We conclude that legitimacy is sought and found in a mixture of formal and informal ways both inside the network company as well as outside. Although the governance regime allowed the network company to take a leading role in the innovative project, it failed as a starting point to claim legitimacy. These findings provide food for thought on how to institutionally embed the role of network companies in the energy transition.

Keywords: governance; network companies; biogas; public values; legitimacy (search for similar items in EconPapers)
Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:sae:crnind:v:17:y:2016:i:2:p:181-201

DOI: 10.1177/178359171601700204

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