Electricity Liberalisation in Britain: the quest for a satisfactory wholesale market design

David M Newbery

Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge

Abstract: Britain was the exemplar of electricity market reform, demonstrating the importance of ownership unbundling and workable competition in generation and supply. Privatisation created de facto duopolies that supported increasing price-cost margins and induced excessive (English) entry. Concentration was ended by trading horizontal for vertical integration in subsequent mergers. Competition arrived just as the Pool was replaced by New Electricity Trading Arrangements (NETA) intended to address its claimed shortcomings. NETA cost over £700 million, and had ambiguous market impacts. Prices fell dramatically as a result of (pre-NETA) competition, generating companies withdrew plant, causing fears about security of supply and a subsequent widening of price-cost margins.

Keywords: electricity; liberalisation; market design; market power (search for similar items in EconPapers)
JEL-codes: D43 L94 (search for similar items in EconPapers)
Pages: 25
Date: 2004-11
New Economics Papers: this item is included in nep-com and nep-ene
Note: CMI, IO
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Related works:
Journal Article: Electricity liberalization in Britain: The quest for a satisfactory wholesale market design (2005)
Working Paper: Electricity liberalisation in Britain: the quest for a satisfactory wholesale market design (2004)
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