Non-Discrimination Clauses in the Retail Energy Sector
February 14, 2013 Leave a comment
Each month we collect up and record all the outputs made by CCP members. To give people an idea of the scope of the research we undertake we publish the abstracts and links to papers written by our colleagues in the Centre.
Morten Hviid and Catherine Waddams have published Non-Discrimination Clauses in the Retail Energy Sector in The Economic Journal.
The British energy regulator has recently reviewed a non-discrimination licence condition imposed to ensure that energy retailers charge the same mark-up in different regions. Loyalty by many to incumbent firms necessitated heavy discounting by entrants to attract customers, which had led to regional price discrimination. Matching characteristics of the energy market to models of discrimination, we identify the necessary conditions for the licence condition to have a positive effect for consumers, and particularly ‘vulnerable’ consumers. The licence condition is likely to have reduced competition in the mainstream energy markets, which seems confirmed by the regulator’s subsequent review of the retail market.