Regulatory interaction in electricity retail theory and evidence from the United States and the European Union

Timo Partanen

Research output: ThesisDoctoral ThesisMonograph

Abstract

In this research I have used a sample that was to cover market - regulatory environment - firm performance permutations capturing the changes in competitive dynamics and the co-evolutionary paths the firms and their respective business environment have taken when the markets were opened for competition. The research process builds on Event Structure Analysis (ESA) as a means to create causal patterns in the interaction between the firm and the environment. Data was collected from primary and secondary sources and complemented by confirmatory interviews. The electricity markets prior to opening for competition were either vertically integrated geographically monopoly markets or monopoly markets where the entry was constrained by other means. The value chain from generation to retail sales was rigid. There was either a position in which one company was in charge of the entire value chain, or the wholesale oligopolies had exclusivity on the sales to local monopoly distribution / retail firms. In most researched jurisdictions an oversupply of power prevailed at the time of the introduction of competition, which subsequently led to price cuts for some customers. During the process the focal point of activities shifted from being between the firm and the regulator / legislator to being between the firm and the customer. There was difference between the cases, but the fundamental shift seemed to follow the same basic pattern. The process ended in the key interaction taking place between the firm and the customer, with the regulator and legislator influence still being active. The regulative framework was not really designed for competitive markets but the existing structure had to be used to support another modification of the system. Key contribution of this research consists of the cyclical co-evolutionary interaction model that captures the interactions between the energy firm and its regulatory, legislative, customer and external interactions to a cohesive whole. The model is complemented by a set of propositions that define the key elements of this interaction. The model builds on the foundation laid by political economy, the theory of public choice and the Austrian economics.
Translated title of the contributionRegulatory interaction in electricity retail theory and evidence from the United States and the European Union
Original languageEnglish
QualificationDoctor's degree
Awarding Institution
  • Aalto University
Supervisors/Advisors
  • Lamberg, Juha-Antti, Supervising Professor
  • Pajunen, Kalle, Thesis Advisor, External person
Print ISBNs978-952-60-3436-2
Electronic ISBNs978-952-60-3437-9
Publication statusPublished - 2010
MoE publication typeG4 Doctoral dissertation (monograph)

Keywords

  • electricity retail
  • co-evolution
  • political economy
  • regulatory interaction

Fingerprint

Dive into the research topics of 'Regulatory interaction in electricity retail theory and evidence from the United States and the European Union'. Together they form a unique fingerprint.

Cite this