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Achieving temperature targets under the Paris Agreement requires urgent measures to curb construction of coal-fired power plants (CFPPs) and expediate the retirement of existing assets. As the world's fourth largest coal consumer, Japan's efforts to reduce coal usage are critical for international climate mitigation. Policies introduced after the Fukushima nuclear disaster have led to a rapid increase in solar. However deregulation of the electricity market has also prompted a rush of new CFPP constructions by new market entrants and incumbent utilities. In parallel, Japanese state agencies and industry are actively exporting CFPP technologies to developing countries. Although these domestic and international actions harbour serious consequences for global climate mitigation efforts, greater understanding of the factors driving Japan's coal dependency is needed to limit further lock-in of future carbon emissions. Filling this gap, this study critically examines narratives employed by actors in government and industry to sustain Japan's domestic and international coal industry. Our analysis shows how Japan's fossil fuel regime is employing recurring narratives to promote continuation of the current coal-based energy system and to mobilise further investments in high-efficiency coal power technologies. We conclude by recommending various policy pathways and institutional reform measures aimed at encouraging wider diffusion of renewable electricity sources while reducing coal dependency.

In some U.S. states that have undergone electricity market restructuring and deregulation, investor-owned utilities (IOUs) were required to divest the majority of their generation assets in order to purchase power from merchant generators, independent power producers, and power marketers competing in the new wholesale market. This paper examines the effect of the governance structures used to purchase power in the wholesale market, the bilateral forward contracts and market transactions, on the technical efficiency of IOUs during the post-divestiture period. Using a two-stage empirical strategy (the non-parametric data envelopment analysis and the difference-in-differences regression approach), I analyze the performance of 152 distribution utilities in the U.S. from 1994 to 2015. The results show that while the use of contracts has no significant effect, the use of market transactions has a significant negative effect on IOU technical efficiency. Trading arrangements in the restructured wholesale markets that rely on the concept of competition generate transaction costs that make it more costly for the utility to use market transactions rather than other alternatives. Thus, market transactions fall short to promote the efficiency purpose of IOUs as an economic organization in this policy-induced market and the adverse effect persists until 20 years after the divestiture.

This article examines China's Electric Power Law and the recent policies governing China's electricity sector from the energy-climate-environment dimension. Using the fragmented authoritarianism framework, it captures the legal system that is still rooted in the pre-reform era, and the antinomic policy making that is driven by the policy imperative to accommodate the shifting pattern of energy supply, the growing awareness over climate mitigation and environmental protection. By examining the most recent policy imperatives on regulating new investment and efficiency, and pricing deregulation, this article focuses on changes in the policy arena and their impacts on the regulatory governance of China's electricity sector. Using the methodology of qualitative study, this article critically investigates these policy changes that generate incompatible regulatory concerns. The incompatibility creates competing regulatory concerns over energy-climate-environment in the policy making process, and generates discord between China's central and provincial governments. Dealing with the challenges will depend on developing a legal framework for China's electricity sector. Findings of this article echoes with energy law scholars’ point of view that energy law has a much bigger role to play to balance different or competing policy agendas to deliver better energy policy that delivers the expected outcomes for society.

This paper inquires into how a reorganization of the value chain running from client-utilities to equipment suppliers within the electricity industry has altered the conditions for diffusing/adopting technological innovation. Through an interview-based qualitative case study of the development and diffusion of high-voltage switchgear, it provides a supplier perspective on how the downstream capacity to recognize and assess the potential value of innovations has fared in the face of downsized utility organizations, seeking to cut costs through aggressive outsourcing of engineering, procurement and construction activities. Highlighting how relations between end-clients and upstream suppliers – following a strategic orientation towards activities considered to be core – increasingly have become mediated by consultants and project-based contractors, the narrative analysis first suggests that this has stolen the industry of important inter-organizational learning processes. This in ways that have reduced the ‘absorptive capacity’ of the utilities sector. Second, the analysis suggests that the contractual form that has come to dominate infrastructure projects further works to de-incentivize the adoption of new technology, by diluting the perceived utility of innovation across the array of actors populating the value chain. Thirdly, the paper calls for renewed policy measures to deal with this reinforced reluctance towards the new.

Japan has been confronted with two demographic forces, declining fertility rates and lengthening life spans, which give rise to the increasing ratio of the elderly (aging society), the decline in population and the prevalence of nuclear families. This study empirically analyzes the demographic effects on residential electricity and city gas consumption in Japan. Our analysis presents the following main results. First, the aging of the society decreases the electricity demand but does not affect the city gas demand significantly. Second, the decrease in population with the prevalence of nuclear families increases the electricity demand but decreases the city gas demand. The direction of the demand for each alternative depends on the balancing of the first and second effects. Third, the analysis also shows clear results about the own- and cross-price effects. Ongoing energy market reforms for price suppression would increase energy demand with possible substitutability between the two energy sources. Our case study of Japan is also applicable to other countries that will have just started to experience the similar demographic pattern of an aging society with energy market deregulation.

This study assesses the regional energy mix potentials of Japan for maximised renewable electricity generation and reduced CO2 emission intensity in the electricity sector, in view of the nationally determined contribution (NDC) mitigation target, and the 2 °C rise limit target. Beginning with the deregulation of the retail electricity market, discussions have been initiated about Japanese electricity system reforms towards 2020. This paper examines the potential energy mix up to 2030 at the regional level, and identifies the need to accelerate electricity system reforms to expand the transregional access to renewable electricity generation. By analysing available data, we assess how regional renewable energy potentials can be put to effective use, and identify how electricity reform should proceed, to both capitalise on renewables and reduce carbon intensity. Finally, we report the large renewable potentials in Japan. However, in order to maximise the use of these potentials, a combination of technologies and policies are required to promote flexible grid operation, and strengthen transmission capacity and renewable priority dispatch order, as well as to introduce technology for stabilizing electricity systems supplied by renewable electricity, such as pumped storage hydropower, storage cells, and demand-response, which can store surplus energy until it is needed.

This paper explores the determinants of electric utility innovation, and examines the impact of electric sector deregulation and market competition on it using a balanced panel database of nine Japanese utilities from 1978 to 2014. Both input (R&D expenditure) and output (patent application number and patent quality) aspects of innovations are examined. The empirical results indicate that deregulation and market competition decrease the former, but increase the latter. These results are followed by a discussion on why this scenario occurs. The results also suggest that, after deregulation, utilities focus more on short-term, business-oriented R&D projects. Hence, we call for governments to support long-term, public-oriented, and environmental research in the electric sector.

The knowledge and enforcement problems faced by governments in defining traditional ‘command and control’ regulation are well known. Significant legal scholarship offers alternative models of ‘smart,’ ‘responsive’ environmental regulation, emphasising the need for policy instrument mixes, including the vital role of voluntary, industry-led sustainability standards. Yet, as is being increasingly recognised, these contributions leave open the need for detailed, qualitative evaluation of instrument mixes as a complement to primarily quantitative cost-benefit analyses that predominate in regulatory impact assessments by governments. Addressing this need, this paper evaluates policy and standards for low and zero carbon homes in England during the Coalition government (2010-2015) when the ecological modernisation discourse of the previous New Labour government became subsumed by a deregulation agenda. Our study, incorporating 70 stakeholder interviews, suggests that, in supplier-driven markets such as housing in England, a ‘smart’ mix of mandatory and voluntary standards requires a strong, central role for government in setting national, mandatory standards and supporting their delivery. There is an important potential supplementary role for voluntary tools and local authority discretion, though our study highlights problems that can arise when such different instruments promote diverging roadmaps towards a policy goal.

Policy makers pursue open markets through deregulatory reform based on a belief that they increase economic efficiency and produce benefits for consumers mainly through price reductions. However, the superiority of competition over regulated monopolies is not established. In a liberalized market, consumers exercising their ability to choose a utility provider is a crucial way of shaping the outcomes of deregulatory reform. While achieving a high switching rate is not the ultimate goal of market reform, it is an important tool through which consumers gain from policy form. We use data from a Japanese household survey conducted before and after recent liberalization and find a positive impact of liberalization on consumer satisfaction by enabling consumers to choose an electricity provider. This result indicates that switching can be utility improving by increasing customer satisfaction and underlines the importance of switching behavior in effectively utilizing deregulatory reform. This study also examines a broad set of determinants of provider switching and discusses the policy implications of the empirical results.

When the institutions governing transactions in the energy sector changed in Canada thirty years ago, the changes were heralded as pro-competitive for natural gas markets, and subsequently authorities and some stakeholders have suggested that households would benefit from gas commodity marketer entry. Using an analysis of the institutions together with a model of the cost pass-through regulatory process, I show that households as a group would not benefit from purchasing the gas commodity from unregulated commodity marketers rather than buying it bundled with delivery from the regulated utility. I next use monthly price data collected from the public web pages of these unregulated sellers to confirm the theoretical prediction. Depending on the time period, five-year natural gas contract commodity prices average more than 75% higher than the utility's regulated cost of gas. On average over the sample period, signing up meant paying over C$400 more for the gas commodity annually. The analysis suggests that claims about the effects of policy change should be informed by a careful assessment of the specific institutional arrangements and the new incentives created by institutional evolution.

From the outset of deregulation and privatisation of UK electricity markets, the desired extent of vertical integration has been debated. Concerns over the dominance of the “Big Six” majors and whether consumers were receiving a fair deal, led the new Government of 2010 to promote the entry of new retail supply firms without generation assets. Increasing consumer choice and facilitating supplier switching were seen as counter-weights to the dominance of the vertically integrated majors. Through various policies favouring new, assetless suppliers, the domestic retail electricity market in the UK has become less concentrated offering more choice to consumers. But the process of reducing market concentration has had setbacks: many new retail suppliers went bankrupt and service quality has been mixed. To address possible short-comings, the Regulator in mid-2019 introduced stricter requirements for a retail supply license but are they sufficient? Combining theory with empirical analysis, it is argued that enhanced requirements are unlikely to be sufficient to ensure the success of these new firms because assetless retailers face competitive disadvantages under the current market structure. Before debating the role and benefits of such firms, their economic viability should be assessed.

Given the growing severity of particulate matter (PM) and greenhouse gas pollution, the Korean government recently began supporting the use of eco-friendly vehicles, such as electric vehicles and hydrogen fuel cell vehicles. However, the uptake of these vehicles has been slower than anticipated because of the high purchase price and lack of infrastructure. Therefore, the Korean government has eased restrictions on liquefied petroleum gas (LPG) vehicles to encourage the vast majority of consumers to purchase LPG vehicles, expecting that they will serve as a stepping stone to switch from internal combustion engine vehicles to their eco-friendly counterparts. However, there have been only a few studies on consumer preferences for LPG vehicles in consideration of this amendment. To analyze consumer preferences for all fuel types, including LPG, this study used a discrete choice experiment combined with a reference-dependent model. The results showed a loss aversion tendency and asymmetric preferences among consumers with regard to vehicle choice. Based on these results, a simulation analysis was conducted to predict the future market share and PM pollution level. The findings indicated that the government's LPG vehicle deregulation policy could achieve positive PM reduction effects in the short term but none in the long term.

This study estimates the price and income elasticities of industrial and residential electricity demand in Japan with the annual data from 1989 to 2014. A time varying parameter (TVP) model with the Kalman filter is applied to monitor the evolution of consumer behaviors in the “post-bubble” period given the exogenous shock (financial crisis in 2008) and the structural breaks (electricity deregulation and Fukushima Daiichi crisis). The TVP model can provide a robust estimation of elasticities and can detect the outliers and the structural breaks. The results suggest that both industrial and residential consumers become less sensitive to price after the electricity deregulation and the financial crisis, and more sensitive to price after the Fukushima Daiichi crisis. Especially the industrial sector is less sensitive to price after the retail deregulation. By contrast, the income elasticities of industrial and residential sector consumers are stable during the examined period. Results also indicate that a negative relationship exists between the price elasticity of electricity demand and the price level of electricity after the electric sector deregulation. Some insights on the further electric sector reform and the environmental taxation in Japan are also provided.

This study aims to develop three broadly defined concepts of designing and evaluating energy policy of a small open economy, namely, efficiency, equity, and sustainability which are applied to Singapore. By analysing the historical energy and economic data and examining energy policies and programs implemented, this study finds that (1) energy intensity improves over time and three strategies employed to improve energy efficiency - tariffs, deregulation and setting energy standards - are found to have some positive effects. (2) A utility rebate programme is implemented and revised continuously to achieve equity in energy consumption across Singapore households. (3) By the weak concept of sustainability, Singapore is considered marginally sustainable. Institutional, technological and market-based approaches are being implemented to increase energy efficiency, improve energy equity and secure sustainability.

The electric industry started as a natural monopoly and was regulated to protect the customers from high prices. Electricity deregulation was expected to reduce prices by introducing competitive markets. Every country or state implementing deregulation has gone through a unique experience. In this paper, the impact of electricity deregulation in the state of California is addressed by first examining historical retail prices, and second by developing a model to estimate the grid marginal costs using historical data. Results show that, although some customers pay lower rates today, the average customer does not pay a lower rate due to deregulation. Moreover, the results of the modeling show that the wholesale prices realized were higher than the marginal cost associated with the grid. Impacts of improved grid management are discussed along with transmission investments, market operator start-up and operation costs, energy and environmental goals, advances in technology on electricity prices, and the impact of deregulation on these factors.

In the early 1990s, the United Kingdom (the UK) initiated widespread reforms in the electricity industry through a series of market liberalization policies. Several other countries have subsequently followed the lead and restructured their electricity industry. A major outcome of the deregulation effort is the spate of takeovers, both domestic and global, by electric utility companies. With the entry of new players and increasing competition, the business environment of the electricity industry has changed dramatically. This study analyzes the economic impact of mergers and acquisitions (M&As) in the electric utility industry after deregulation. We have examined acquisitions that took place between 1998 and 2013 in the United States, Canada, the UK, Germany, and France. Although previous studies showed no evidence of a positive effect on acquiring firms through M&As, we find that acquisitions by electric utility companies increased the acquiring firms’ share value and improved their operating performance, primarily through efficiency gains after the deregulation. These results are consistent with the empirical evidence and implications presented by Andrade et al. (2001) that M&A created value for the shareholders of the acquiring and target combined firms.

Price deregulation in Australia's National Electricity Market has led to increased competition and greater price dispersion in retail electricity markets. However, recent increases in electricity prices and concerns around disengaged customers have led policy makers to impose a ‘default offer’ to cap retail electricity prices. In this article, we develop a model that demonstrates the mechanism through which a price cap leads to the withdrawal of the lowest priced offers from the market, in effect reducing the benefits available to customers that ‘shop around’. We calculate a measure of actual price dispersion showing that a compression of offers since the price cap was imposed has reduced the returns from search by 2.3 per cent, or $37 per year on average. We argue that the important issue of vulnerable, disengaged customers on high priced offers is best addressed through non-price regulation policy options, such as an auction for the right to serve customers that are both vulnerable and disengaged.

The exploitation of low-cost shale gas in the Marcellus Formation, the deregulation initiatives in the U.S. and Mexico, and the emergence of natural gas as a bridging fuel to a low-carbon economy has fueled the growth of North American natural gas production, which is projected to keep growing in the mid-term to support the increasing LNG exports. Greater introduction of renewables and deeper electrification suppress both supply and demand for natural gas in the long-term. The long lead times of pipeline operation and field exploitation render the timing of natural gas abatement critical to natural gas infrastructure stakeholders. Full integration of the U.S., Canadian, and Mexican natural gas markets implies that the abatement trajectories of the three countries are tightly linked. This paper studies the development of the integrated North American natural gas markets and infrastructure under different assumptions on resource availability, technological progress, and global crude oil prices. We quantify the impact of each scenario by using the North American Natural Gas Model. Our analysis shows that cross-border U.S.-Mexico trade is more resilient under all three shocks compared to U.S.-Canada trade. Increasing Mexican production could drive the growth of the domestic Mexican market instead of reducing U.S.-Mexico trade.

China's electricity demand has grown rapidly over only two decades and is currently the largest in the world. This was largely owing to a framework of regulation in which governments regulated prices and quantities, and there was ample incentive for investment. As the growth in electricity demand has slowed and the use of renewable energy has been impeded by integration-related challenges, China has embarked on a new round of power sector reform, with a focus on market construction. Considering four years of market experiments at the provincial level, we review the backgrounds and goals of the reforms, as well as the current progress toward meeting the initial targets. Then, we discuss the key challenges to be overcome to achieve complete implementation of the reforms, with special emphasis on the system of dispatch. We recommend that China's reforms, in order to achieve the goal of market-based competition, must embrace short-term markets, a greater role for independent regulation, compatibility with renewable energy, and inter-provincial coordination.

The deregulation of the Swedish electricity market in 1996 made it possible to operate municipal district heating commercially. Until that time district heating had been organized mainly as municipal utilities. After 1996 district heating is instead expected to function on a market. In competitive and integrated markets, prices are expected to be equal, or converging. To find out if district heating operates on an integrated market the differences in price levels, price convergence, price strategy, and business goals, among municipal, private and state owned district heating companies are investigated. Price statistics was used along with results from a questionnaire that was answered by representatives for 109 Swedish district heating companies. The results show that prices among district heating systems do not converge significantly and that variations in prices among municipal systems are larger than among private and state owned systems. Furthermore, despite the fact that district heating is supposed to be commercial, a vast majority of district heating companies apply cost-based pricing and not market pricing. The municipal companies give priority to political goals before financial goals. The conclusion is that a Swedish integrated market for heat has not yet evolved, and some district heating price-controlling mechanism is necessary.

Electricity markets are complex; they involve long lead-times, include feedbacks that are generally hard to interpret and are influenced by environmental concerns and political objectives. After liberalization, the markets moved from a monopoly situation with a single service provider and captive customers to competitive markets with multiple service providers. Foreseeing the consequences of regulatory decisions is thus becoming increasingly complicated for the regulator. However, understanding these is central to avoid mismatches between the markets and their regulation, which could result in unanticipated and costly long-term consequences. In this paper we aim to provide a behavioural regulatory framework to help understand how electricity markets and their regulation can successfully coevolve. We identify four stages of market evolution, with their respective regulatory challenges. Next, we discuss several behavioural elements that affect electricity markets at the different stages. We then provide examples of regulatory failures at the different market stages, highlighting the role of the behavioural factors. We conclude with a general discussion of how this framework can contribute to addressing the challenges involved in regulating electricity markets.

A major concern with electricity market restructuring has been the possibility that fuel price volatility may leak into electricity prices. This view is credible if electricity price – fuel costs relation is stronger in restructured than in non-restructured states. We examine the validity of this view using panel data on for industrial, residential and commercial sectors in US states. The analysis accounts for cross-sectional dependency, cross-state heterogeneity, and interdependency of state fuel markets. The common correlated effects mean-group estimates suggest that (1) coal and natural gas costs Granger-cause electricity prices for industrial and commercial customers in both non-restructured and restructured states; (2) both fuel costs also Granger-cause electricity prices for residential customers in non-restructured states but only natural gas costs cause electricity prices in restructured states; (3) the long-run impacts of fuel costs on electricity prices are higher in non-restructured than restructured states; and (4) electricity prices exhibit lower persistence in non-restructured than in restructured states. These results are do not support the view of higher integration between input costs and electricity prices in restructured markets. Policymakers should be aware of the differences in electricity price response in alternative market structures when implementing new federal policies.

The regulated price mechanism in China's power industry has attracted much criticism because of its incapability to optimize the allocation of resources. To build an “open, orderly, competitive and complete” power market system, the Chinese government launched an unprecedented marketization reform in 2015 to deregulate the electricity price. This paper examines the impact of electricity price deregulation at the industry level. We first construct two-stage dynamic game models to portrait the interaction between the coal and coal-fired power industries. Using the models, we compare analytically the equilibriums with and without electricity price regulation concerning electricity price, electricity generation, coal price and coal production. The theoretical analyses find three regulated electricity price intervals that differentiate the reform impacts. Afterward, we collect empirical data to estimate the model parameters. The influences on the two industries in terms of market outcome and industrial profitability are simulated. Our results suggest that the current regulated electricity price falls within the medium interval, which means deregulation will result in higher electricity price but lower coal price, less coal production and less electricity generation. The robustness analyses show that our results hold with respect to the electricity generation efficiency and price sensitivity of electricity demand.

We propose a competitiveness index for the electricity industry based on efficiency, stability, and growth factors identified from previous studies subject to data accessibility. These are then weighted appropriately through the application of the analytical hierarchy process. This index is an alternative tool to capture the diverse characteristics of the electricity industry in order to analyze performance after deregulation. Using the competitiveness index, we analyze the effect of regulation change in specific economic environments represented by the level of economic development, energy intensity, and manufacturing share, for example. According to the results, deregulation generally increases competitiveness, but the effect depends on the economic environment and the type of regulation. Deregulating entry and vertical integration to increase competitiveness is more effective in countries where the level of economic development, energy intensity, and manufacturing share are low. The manner in which the privatization effect is related to the economic environment is, however, unclear.

This paper examines the effect of size control policy on the energy and carbon efficiency for Chinese fossil fuel power industry. For this purpose, we propose two non-radial directional distance functions for energy/carbon efficiency analysis of fossil fuel electricity generation. One is named a total-factor directional distance function that incorporates the inefficiency of all input and output factors to measure the unified (operational and environmental) efficiency of fossil fuel power plants, and the other is called an energy–environmental directional distance function that can be used to measure the energy–environmental performance of fossil fuel electric power plants. Several standardized indicators for measuring unified efficiency and energy–environmental performance are derived from the two directional distance functions. An empirical study of 252 fossil fuel power plants in China is conducted by using the proposed approach. Our empirical results show that there exists a significant positive relationship between the plant size and unified efficiency, the five state-owned companies show lower unified efficiency and energy–environmental performance than other companies. It is suggested that Chinese government might need to consider private incentives and deregulation for its state-owned enterprises to improve their performance proactively.

Deregulation of the Danish retail electricity market nearly a decade ago has produced little consumer switching among suppliers or renegotiation of supplier service contracts. From an energy policy perspective, a certain amount of supplier switching is an important indicator of the success of market deregulation. This argues that poor relationship management and a lack of economic benefits are two critical barriers to consumer switching. Latent class analysis indicates that only 11.4% of consumers are non-switchers, whereas 41.1% can be considered potential switchers and approximately one-half (47.5%) can be considered apathetic consumers. We also discuss the managerial implications for both electricity suppliers and policy makers. •This paper investigates the barriers for electricity supplier switching in Denmark.•Four switching barriers were identified.•Relationship management and economic benefits are critical for consumer switching.•Three consumer segments for electricity supplier switching were identified.

The Indian political class is known to employ populist, albeit economically unsustainable, measures to replace intrinsic ‘valence’, especially shortly prior to election windows. Such measures include loan-waivers, interest rate concessions, provision of free electricity for agriculturists, etc. The union government’s leverage to maneuver and to micro-manage retail fuel prices within partially deregulated environments is hypothesized to provide incumbents with an advantage over rival contestants in the electoral process. This paper analyzes the evolution in the retail prices of diesel and petrol (gasoline), and the transfer of such evolution, into the inflation index of the ‘all commodity’ basket. It is observed that when international benchmark prices are relatively low and domestic inflation is moderate, the transfer occurs within about 42 weeks. During periods of high oil prices-frequently above USD 100 a barrel-and high inflation-higher than 5.00–5.50%-prices of petroleum distillates tend to feed into overall inflation more rapidly, within about 34–40 weeks. The study, covering a total of 82 elections for the central and state (provincial) governments during the period 2000 to 2013, concludes that even as patterns of manipulation of prices are apparent, ceteris paribus, such leverage does not necessarily seem to translate into favorable electoral outcomes. This conclusion reiterates observations that economic im/prudence may not necessarily determine electoral outcomes, and that the basis for electoral choices made by the Indian voter–consumer remains subjective.

The Irish and British governments have recently mandated the replacement of domestic gas and electricity meters with smart meters. Their deployment strategies differ based on the extent to which deregulation of the gas and electricity market has been successful. A broad debate has been held on the various assumptions justifying the cost-benefit analyses and the permutations of these assumptions. What has been paid less attention is to what end is a smart meter being employed towards. A corollary research question is whether the deployment plan is targeting the correct sector. If the purpose is to introduce automated meter reading across the housing sector then a better strategy would be to legislate for accurate monthly bills, as in Sweden. Allowing suppliers to have greater flexibility will likely reward rather than stifle the design of competition. If the purpose is to manage demand then it may be that it's working with complex tariffs and not the meter per se that counts. The high consuming end-use categories and profile classes would be better placed for that exercise. Innovation theory also supports the targeting of new innovations to larger consumers, allowing metering innovations to proceed along historical trajectories.

The Korean electricity industry saw significant changes following the reform in April 2001. Until the last decade, the industry was monopolized by the Korea Electric Power Corporation (KEPCO), a state-owned, vertically integrated company. The 2001 reform divided KEPCO's power generation division into six power generation companies (GENCOs), with the aim of improving efficiency and introducing competition in the electricity industry. In this study, we used capital total factor productivity (KTFP) to analyze profit changes from fixed input capital, and an index number profit decomposition (INPD) to examine the sources of the profit changes. We investigate the industry thoroughly from three points of view: the overall industry over time; the power generation sector by company; and the transmission and distribution sectors of the Korea Electric Power Corporation (KEPCO). Next, we measured how the profits from productivity growth were distributed to consumers, fuel suppliers, employees, and company owners. The results suggest that a more reasonable price system for both wholesale and consumer prices needs to be implemented prior to the privatization and deregulation of the Korean electricity industry.

Since electricity market restructuring, questions over adequate levels of R&D investments persisted. Using an unbalanced panel data of 70 electricity-generating firms across 15 Organisations of Economic Co-operation and Development countries from 1990 to 2008, this paper empirically examines the impacts of entry liberalization (allowing third party access, establishing a wholesale market, and deregulating a retail market), vertical unbundling, privatization, and firm size on R&D investments. Entry liberalization is associated with a decline in R&D investment. Establishing a wholesale market exhibits the greatest negative effects on R&D investment. Regulated TPA and retail market deregulation also decrease R&D. The effect of privatization is not independently salient but interacts with a wholesale pool to lower R&D investments. Large firms spend more on R&D investment than small firms. Results indicate that the restructuring of the electricity industry reduces R&D investment, which may be detrimental to the reliability and the efficiency of the electricity system as well as to the creation and maintenance of the innovation capabilities necessary to address demand and environmental concerns.

Residential retail competition in electricity supply was introduced in many countries and some US states as part of electricity industry deregulation. Following problems in the electricity market in California in 2000/2001 many US states, including North Carolina, suspended their deregulation agenda. Recent technological advances have made competition more viable, so we ask if NC should reconsider deregulation and retail competition. The welfare benefits will depend on consumers’ willingness to switch suppliers and the potential for value added innovations. In electricity and industries such as pay-tv and telecommunications consumers are ‘sticky’, remaining with their current supplier even though rivals offer savings. Moreover, some analysts question the likelihood of significant welfare improvements from retail competition. We survey residents in two NC counties focusing on: (i) households’ knowledge of and interest in retail competition, (ii) factors that would encourage them to switch suppliers and (iii) the required savings to encourage switching. About 50–65% of respondents would favor retail competition in NC. Demographic variables and experience switching in other industries affect opinions and the savings required to incent switching. We conclude the estimated rate reduction to encourage competitive switching will be hard to achieve in NC as long as rates remain below the national average.

This paper explores the issues related to regulatory reform and liberalisation leading toward competition in the Thai electricity sector, which is still under the monopoly control of state-owned enterprises (SOEs). Following an overview of the current market structure of the Thai electricity sector, the process of liberalisation and deregulation that contributes to the uncompetitive market structure under SOEs’ control is examined. The author asserts that there are problems within the Energy Commission and the Energy Industry Act BE 2550 (2007) that contribute to the continuance of an uncompetitive electricity supply. Possible reforms to the Thai electricity regulation are proposed with the aim of creating market competition and efficiency in the Thai electricity sector.

Recent reform activities to liberate and privatize the Turkish utility energy sector through deregulation have transformed the scope of the historically government-owned corporations. However, during the free market process approach, power theft has become an issue that requires national attention. This paper examines the current use of two governance tools—privatization and regulation, and suggests two others to promote a framework of efficient electricity distribution (grants and public information). The capacity of the tools to provide a solution to power losses is discussed while considering the barrier of political acceptability in regions of the country where pockets of resistance exist.

Residential energy consumption (REC) is the second largest energy use category (10%) in China and urban residents account for 63% of the REC. Understanding the underlying drivers of variations of urban REC thus helps to identify challenges and opportunities and provide advices for future policy measures. This paper applies the LMDI method to a decomposition of China's urban REC during the period of 1998–2007 at disaggregated product/activity level using data collected from a wide range of sources. Our results have shown an extensive structure change towards a more energy-intensive household consumption structure as well as an intensive structure change towards high-quality and cleaner energy such as electricity, oil, and natural gas, which reflects a changing lifestyle and consumption mode in pursuit of a higher level of comfort, convenience and environmental protection. We have also found that China's price reforms in the energy sector have contributed to a reduction of REC while scale factors including increased urban population and income levels have played a key role in the rapid growth of REC. We suggest that further deregulation in energy prices and regulatory as well as voluntary energy efficiency and conservation policies in the residential sector should be promoted.

The role of crude oil as the main energy source for the global economic activity has motivated the discussion about the dynamics and causes of crude oil price changes. An accurate understanding of the issue should provide important guidelines for the design of optimal policies and government budget planning. Using daily data for WTI over the period January 1986–March 2011, we analyze the evolution of the informational complexity and efficiency for the crude oil market through multiscale entropy analysis. The results indicated that the crude oil market is informationally efficient over the scrutinized period except for two periods that correspond to the early 1990s and late 2000s US recessions. Overall, the results showed that deregulation has improved the operation of the market in the sense of making returns less predictable. On the other hand, there is some evidence that the probability of having a severe US economic recession increases as the informational efficiency decreases, which indicates that returns from crude oil markets are less uncertain during economic downturns.

Russia commenced liberalization of electricity prices in 2007 increasing the liberalization rate by 10–25% every six months. It was planned to reach full liberalization by 2011. Currently, the degree of liberalization is uncertain because of intense price regulation and a highly concentrated market in the hands of four large generating companies. Increased regulation and further consolidation may drive the market towards its pre-reform state. This paper analyses the competitive landscape of the Russian electricity market by assessing the ownership structure of electricity generation, price drivers, and government involvement in the electricity wholesale market in Russia. The main research question is why the targeted level of market liberalization has not been fully achieved in the Russian electricity market.

A key selling point for the restructuring of electricity markets was the promise of lower prices. There is not much consensus in earlier studies on the effects of electricity deregulation in the U.S., particularly for residential customers. Part of the reason for not finding a consistent link with deregulation and lower prices was that the removal of transitional price caps led to higher prices. In addition, the timing of the removal of price caps coincided with rising fuel prices, which were passed on to consumers in a competitive market. Using a dynamic panel model, we analyze the effect of participation rates, fuel costs, market size, a rate cap and switch to competition for 16 states and the District of Columbia. We find that an increase in participation rates, price controls, a larger market, and high shares of hydro in electricity generation lower retail prices, while increases in natural gas and coal prices increase rates. We also find that retail competition makes the market more efficient by lowering the markup of retail prices over wholesale costs. The effects of a competitive retail electricity market are mixed across states, but generally appear to lower prices in states with high participation rates.

In this article, we discuss the “cycle hypothesis” in electricity generation, which states that the introduction of deregulation in an electricity system might lead to sustained fluctuations of over- and under-capacity. The occurrence of cycles is one of the major threats for electricity markets as it affects the security of supply, and creates uncertainty in both the profitability of electricity companies and in consumer prices. We discuss the background for these cycles using analogies with other capital-intensive industries, along with evidence from the analysis of behavioral simulation models as well as from experimental electricity markets. Using data from the oldest deregulated markets we find support for the hypothesis in the case of the English and Chilean markets, based on an autocorrelation analysis. Evidence from the Nordpool market is more ambiguous, although we might be observing the first half of a cycle in generation capacity. Comparing a simulation of the English market performed in 1992 with the actual performance we can observe that the qualitative behavior of the model is consistent with the actual evolution. Finally, we discuss possible mechanisms for damping cycles in electricity generation, such as mothballing, capacity payments, and reliability markets.

Sueyoshi et al. (2009) have examined a synergy effect between electricity and gas services in the US electric utility industry. They have compared electricity-specialized firms with diversified utility firms in their financial performance and corporate value. A problem of their study is that it has not empirically measured the operational performance of the electric utility firms. As an extension of the preceding study, this research investigates the operational performance of 104 US electric utility firms (1990–2004) by fully utilizing DEA (Data Envelopment Analysis). This study finds the three new policy implications. First, the synergy effect has not existed in the operational performance of diversified utility firms before and after the deregulation on the US electricity markets. Thus, core business concentration is more effective for electric utility firms than corporate diversification to enhance their operational performance under the current US deregulation policy. Second, the operational performance has had an increasing trend until 1996 and a decreasing trend after 1996. Thus, the US deregulation policy has been influential on their operational performance. Third, the enhancement in operational performance of electric utility firms has improved their financial performance. The improvement in financial performance has increased their corporate value. Thus, this study finds the business causality among operational performance, financial performance and corporate value in the US electric utility industry.

This article investigates the deregulation of the Swedish electricity industry as a political process. Discussions about deregulation started in the late 1980s. A first step in the process was the corporatization of the Swedish state-owned utility Vattenfall in 1992. The deregulatory process culminated with the new Electricity Law, which entered into force in 1996. We investigate in historical depth how a diverse range of actors contributed to shaping both the new institutional environment and the political discourse. The article scrutinizes not only the formal political decision-making process and the activities of a variety of ministries, boards and agencies, but also the processes by which energy companies and other relevant industrial actors influenced the outcome of the regulatory reforms. We explicitly focus on activities taking place on both political and business arenas, showing that major stakeholders acted on several arenas simultaneously to influence the deregulatory process and that the large power companies were most skilful in doing so. We also show that activities on the political and business arenas mutually reinforced each other in shaping the new regulatory framework.

About ten years have passed since the deregulation of the U.S. retail electricity market, and it is now generally accepted that the available data is adequate to quantitatively assess and compare conditions before and after deregulation. This study, therefore, estimates the changes in price elasticity in the residential electricity market to examine the changes, if any, in household sensitivity (as a result of retail electricity market deregulation policies) to residential electricity rates. Specifically, six types of panel data are prepared, based on three cross-sections—all states (except for Alaska and Hawaii) and the District of Columbia, deregulated states, and non-deregulated states—and two time series—the period before deregulation and the period after deregulation. The panel empirical analysis techniques are used to determine whether or not the variables are stationary, and to estimate price elasticity. We find that there is no substantial difference in the price elasticity between deregulated and non-deregulated states for both periods—before deregulation and after deregulation. Thus, it can be said that the deregulation of the retail electricity market has not made consumers more sensitive to electricity rates and that retail deregulation policies are not the cause of price elasticity differences between deregulated and non-deregulated states.

After deregulation of the energy market in Norway, a number of mergers and acquisitions of hydropower generating companies have taken place. However, valuation of these companies has proved controversial. From an ex-post perspective, there is support for the criticism that generation assets have been sold too cheaply. This article presents a simple valuation model providing evidence of how value has evolved. On the basis of these results, we discuss the valuation from an ex ante perspective and in the light of the market efficiency hypothesis of Fama (1970, 1991).

Data Envelopment Analysis (DEA) has been widely used for performance evaluation of many organizations in private and public sectors. This study proposes a new DEA approach to evaluate the operational, environmental and both-unified performance of coal-fired power plants that are currently operating under the US Clean Air Act (CAA). The economic activities of power plants examined by this study are characterized by four inputs, a desirable (good) output and three undesirable (bad) outputs. This study uses Range-Adjusted Measure (RAM) because it can easily incorporate both desirable and undesirable outputs in the unified analytical structure. The output unification proposed in this study has been never investigated in the previous DEA studies even though such a unified measure is essential in guiding policy makers and corporate leaders. Using the proposed DEA approach, this study finds three important policy implications. First, the CAA has been increasingly effective on their environmental protection. The increased environmental performance leads to the enhancement of the unified efficiency. Second, the market liberalization/deregulation was an important business trend in the electric power industry. Such a business trend was legally prepared by US Energy Policy Act (EPAct). According to the level of the market liberalization, the United States is classified into regulated and deregulated states. This study finds that the operational and unified performance of coal-fired power plants in the regulated states outperforms those of the deregulated states because the investment on coal-fired power plants in the regulated states can be utilized as a financial tool under the rate-of-return criterion of regulation. The power plants in the deregulated states do not have such a regulation premium. Finally, plant managers need to balance between their environmental performance and operational efficiency.

The purpose of this paper is to examine the lessons from the recent history of telecoms deregulation for electricity (and by implication heat) network regulation. We do this in the context of Ofgem's RPI-X@20 Review of energy regulation in the UK, which considers whether RPI-X-based price regulation is fit for purpose after over 20 years of operation in energy networks. We examine the deregulation of fixed line telecoms in the UK and the lessons which it seems to suggest. We then apply the lessons to electricity networks in the context of a possible increase in distributed generation directly connected to local distribution networks. We conclude that there is the possibility of more parallels over time and suggest several implications of this for the regulation of electricity and heat networks.

Central Norway is expected to have a gap of 8 TWh in 2010 because of heavy investments in energy-intensive industries. The region has two landing sites for natural gas and a considerable potential for wind power to cover the gap. Small-scale hydropower and upgrading of existing hydropower plants also constitute a regional energy potential. Paradoxically, the most realistic investment prospect seems to be extensive investments in new transmission lines to cover the supply deficit. The aim of this paper is to present a problem of regional supply security and public intervention to illustrate and discuss the challenges of arriving at long-term capacity adequacy in deregulated electricity markets.

Many economists such as Wilson (2002) [Wilson, R., 2002. Architecture of power market, Econometrica, 70, 1299–1340] have considered that there are similarities between electricity and gas services in the US electric utility industry. Hence, they expect a synergy effect between them. However, the two businesses do not have technology similarities at the level that the gas service produces a synergy effect with electricity. To examine whether there is a synergy effect of corporate diversification in the industry, we compare electricity-specialized firms with diversified utility firms in terms of their financial performance and corporate value. The comparison indicates that core business concentration is more effective for electric utility firms than corporate diversification under the current US deregulation policy.

Deregulation of Japanese electric power industry began in 1995. After the amendment of Electricity Utility Industry Law in 1995, competition was partially introduced in a generation sector and retail competition started from 2000. Eligibility to choose suppliers was gradually extended from larger to smaller customers. As of 2008, almost all customers except households can choose their electricity suppliers. Based upon both previous implementation result of competition policy and review on their achievement, Japanese government will begin new policy debate in 2013 to assess further retail competition which includes household customers. To prepare for policy suggestion on the future electric power industry, this study examines the cost structure of Japanese electricity distribution. For the purpose, we estimate a multi-product translog cost function of Japanese electricity distribution from 1983 to 2003. Using the estimated cost function, we calculate several economic measures such as productivity growth, technical change and economies of scale and scope. The empirical results of this study indicate the improvement in productivity growth after deregulation.

We illustrate and discuss the use of a computer-based learning environment, known as a microworld, for training agents in the Colombian electricity market. As the market operator was concerned with efficiency in the electricity spot market because of an insufficient number of participants, they commissioned a tool that could help potential participants to learn about both market operation as well as the risk management it involved. By making the industry more transparent it was intended that a larger number of traders and companies would participate in the market, making it more efficient. We describe the development and use of this tool, which is based on system dynamics and gaming.

In the past two decades, China has experienced a series of regulatory reforms in its electricity industry, aimed at improving power production efficiency. The central planning system was broken up and the market-oriented modern enterprise system was established. Furthermore, the former vertically integrated electricity utilities were divested and the generation sector was separated from the transmission and distribution networks. In this paper, we intend to estimate the impact of regulatory reforms on production efficiency of fossil-fired generation plants using the plant-level national survey data collected in 1995 and 2004. Applying the econometric method of Differences-in-Differences, we estimate the effects of these reforms on the demand for inputs of employees, fuel and nonfuel materials. The results show that the net efficiency improvement in labor input associated with the regulatory reforms is roughly 29% and the gains in nonfuel materials are about 35%, while there is no evidence of efficiency gains in fuel input associated with the electricity reforms.

For the last 20 years, countless countries have been carrying out structural reforms in the natural gas industry, trying to achieve efficiency and economic rationality with the introduction of competition. The objective of the paper is to present an approach to the development of competition and infrastructure of the Brazilian natural gas industry. This approach is based on a market projection to 2011, on the international experience and on the characteristics of the Brazilian market, infrastructure and regulatory framework. Possible impacts of the proposed measures are also provided. According to the market projection carried out in this paper, in 2011 there will be a possible surplus of natural gas in the country, which includes a dependence diminishing of the Bolivian gas supply. This gas surplus, allied to an upcoming Gas Law and the trade liberalization in the states of Sao Paulo and Rio de Janeiro, can stimulate the development of competition, if some changes that proposed in this paper are made in the current Gas Bills. The approach proposed herein seeks to stimulate non-discriminatory open access, focused on information transparency and tariff regulation to help the development of infrastructure and competition.