The regulation of the UK retail electricity market

Abstract

This thesis is a study of the regulatory regime which governs the retail electricity market in the United Kingdom. It focuses in particular on the relationship between retailers, consumers and the regulatory authorities and the role of simple and transparent information in determining the price structure in the retail electricity market. This dissertation examines the development and the problems within the UK retail electricity market during the critical period between 2003 and 2010 and analyses the role of the regulatory regime in this. The study critically reviews the argument for using a system of market prices as the best way to provide choices and lower prices for consumers along with the argument for strengthening the role of the regulatory body in response to the interests of consumers. The study shows that this free market model, as favoured by retailers, has failed to provide consumers with either valuable choices or lower prices. It shows that because: 1) consumers are not able to use price information to inform their choices; there is relatively little ‘shopping around’ for the best price; and 2) the regulatory body is captured by suppliers. The study suggests improvement in the regulatory regime relating to information to facilitate greater efficiency in the retail electricity market and to increase the level of consumer protection.