Re-regulation in the UK
By Alberto Mingardi
For quite a while, the British electricity market (in itself, an interesting case of successful liberalisation) has been the object of a campaign aiming at its re-regulation.
Now it is the turn of the British Competition & Markets Authority (the antitrust-on-steroids body which ironically resulted from the merger of the Competition Commission and the Office of Fair Trading) to make its proposal. Carlo Stagnaro and Philip Booth report that the CMA considers the electricity markets to be plagued by “over-regulation and low consumer engagement”. But to solve the second problem, they may actually aggravate the first going back to what Stagnaro and Booth call “the mother of all regulations: price control, or, to be fair, a softer version thereof”.
CMA is proposing a “transitional safeguard regulated tariff” to be introduced, in order to “provide direct protection to disengaged customers”. Protecting disengaged consumers may be a praiseworthy goal but I don’t quite understand how you can wake them up, by “protecting” them with a special tariff, that is, by decreasing their incentive to get better informed.
Carlo and Philip point out that a similar approach has already been tried: in Italy. Results aren’t exciting.