Lessons from the British restructuring experience
- Brower & Co., Andover, MA (United States)
- Univ. of Sussex, Brighton (United Kingdom)
Learning from experience across the pond, the authors see that under performance-based regulation companies may have an incentive to cut costs, but not prices. Also, they see that efficient operation of a power pool is difficult to achieve when one or more generators is able to exercise market power. The past seven years` experience with electric industry privatization and restructuring in Britain provide some valuable lessons for US policy makers considering similar reforms in this country. The authors conducted a review of the British restructuring experience for the National Council on Competition and the Electric Industry, a joint program of the National Association of Regulatory Commissioners and the National Conference of State Legislators. Here are the central questions considered: (1) Have privatization and restructuring improved economic efficiency and reduced prices in Britain? (2) Has effective competition in electricity generation been achieved? If not, why not? (3) Has the approach of retail competition put residential and low-income consumers at a noticeable disadvantage? (4) Has the environmental performance of the electricity industry improved or deteriorated? and (5) What lessons from this experience can be transferred to the United States? Even seven years after restructuring took place, there is little sign that the new structure has yet settled into a reasonably stable form. Their conclusions are therefore somewhat provisional, although the lesson that restructuring is a lengthy and unpredictable process is, in itself, important. Moreover, there are substantial differences between the two countries that make it difficult to draw firm lessons. But enough of the questions can be answered to help states address some potentially challenging issues and avoid some potentially costly mistakes.
- OSTI ID:
- 535277
- Journal Information:
- Electricity Journal, Journal Name: Electricity Journal Journal Issue: 3 Vol. 10; ISSN ELEJE4; ISSN 1040-6190
- Country of Publication:
- United States
- Language:
- English
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