The doctoral dissertations of the former Helsinki University of Technology (TKK) and Aalto University Schools of Technology (CHEM, ELEC, ENG, SCI) published in electronic format are available in the electronic publications archive of Aalto University - Aaltodoc.
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Regulatory Interaction in Electricity Retail; Theory and Evidence from the United States and the European Union
Timo Partanen
Doctoral dissertation for the degree of Doctor of Science in Technology to be presented with due permission of the Faculty of Information and Natural Sciences for public examination and debate in Auditorium TU1 at the Aalto University School of Science and Technology (Espoo, Finland) on the 17th of December 2010 at 12 noon.
Dissertation in PDF format (ISBN 978-952-60-3437-9) [6331 KB]
Dissertation is also available in print (ISBN 978-952-60-3436-2)
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.
Keywords: electricity retail, co-evolution, political economy, regulatory interaction
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Last update 2011-05-26