Electricity market liberalization for households and its marketing implications: the case of Slovenia

Bojnec, Štefan and Papler , Drago (2012) Electricity market liberalization for households and its marketing implications: the case of Slovenia. In: Marketing challenges in new economy. Sveučilište Jurja Dobrile u Puli. ISBN 978-953-7498-57-3

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Sažetak

Market structures, market mechanisms, and degree of market deregulation and liberalization in the electricity distribution system differ between countries. In Europe there is a tendency to create a Single European electricity market (Bower, 2004). Energy markets in Europe have been gradually liberalised with an aim to encourage competition and to increase electricity market efficiency. Acaravci (2010) argues on causality between energy consumption and economic growth. With the increasing energy consumption, the efficiency of energy and electricity market is important for economic efficiency, management of energy consumption and for sustainable economic development (Bojnec and Papler, 2011). Electricity market deregulation and price liberalization should encourage a greater competition to reduce sources of economic inefficiencies, which are caused by different regulative interventions and persistent market power (Philipson and Willis, 1998; Stoft, 2002). The changes of the agreements on trade and distribution of electricity energy, deregulation and liberalization of electricity market to improve mechanisms for allocation of resources and reduction of impediments in lines of distribution of electrical energy are also important for the Slovenian market of electrical energy. The deregulation and liberalization of electricity distribution markets is expected to lead to an increase in the number of competitors and to more competitive markets (Eydeland and Wolyniec, 2003). This present paper focuses on electricity market liberalization for households in Slovenia and its implications for households’ electricity bills, electricity suppliers, and society. The gradual deregulation and liberalisation of the electricity markets in Slovenia has been completed since mid 2007. The initial deregulation in Slovenia has started in 2001 with the liberalization of the electricity market for the largest industrial users of electrical energy. The deregulation has followed in the mid 2004 for the other electricity users, except for households, and in the mid 2007 also for the households’ electricity users (Bojnec and Papler, 2006a, 2006b, 2010; Papler and Bojnec, 2006, 2007; Pollitt, 2007). The entry of new competitive suppliers and free trade, particularly possible import competition, might contribute to the increased quality and price competition. While the number of suppliers in the electricity market of households has increased and the initially increased market competition resulted in the process of switching of the consumers between the suppliers, the electricity price development after the initial short period of decline and stability has increased. This has raised the question whether the households’ electricity consumers overpaid the electricity and whether the electricity suppliers have to return for the overcharged and overpaid bills for households’ electricity, due to an oligopoly agreement on market supply division and settings of electricity price. To test these hypotheses, we employ different empirical approaches. Firstly, we present summary statistics on main developments of the households electricity market in supply, demand, and developments of real price. The market structure is measured by Lorenz curve and by Gini coefficient of market concentration. Secondly, we present issues of cartel agreement between suppliers and its implications due to overpaid electricity for consumers in the case of the typical standard consumer group during a controversial period of the overcharged electricity bills for households. On this basis we present welfare implications of the electricity market deregulation for a typical household in Slovenia on its electricity bill, implications for electricity suppliers, and for society. Thirdly, electricity consumption by households depends on different socio-economic factors, including growth of incomes and associated changes in the way of life which depends on the use of different household machines. The determinants of electricity demands are analyzed by using regression analysis (e.g. Kachigan, 1991; Norušis, 2002) to test the association between the household’s electricity consumption and real the price of electrical energy, real income and real prices of substitutes for the electrical energy. In the estimation of the demand function for electricity consumption by households, we estimate the sign of association and significance of the association of electrical energy consumption with direct price, income and cross-price elasticity. We find that the consumption of electrical energy by households is positively associated with real income of households, which is expressed by real wages, but it is negatively associated with the real price of electrical energy for households at the higher tariff. It is also positively associated with real prices of substitutes for natural gas for households or for fuel oil as well as with a dummy variable for market liberalization of electrical energy market for households. Finally, we derive managerial implications for electricity suppliers, welfare implications for households’ electricity consumers and society, and policy implications.

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Tip objekta:	Dio knjige
Mentor:	NIJE ODREĐENO
Dodatne informacije:	e-book
Teme:	3 Društvene znanosti > 33 Ekonomija. Ekonomska znanost > 339 Trgovina. Međunarodni gospodarski odnosi. Svjetsko gospodarstvo > 339.1 Opća pitanja trgovine. Tržište > 339.138 Marketing
Odjeli:	Odjel za ekonomiju i turizam "Dr. Mijo Mirković"
Datum pohrane:	04 Jul 2013 06:21
Zadnja promjena:	04 Jul 2013 06:21
URI:	http://eknjiznica.unipu.hr/id/eprint/2230

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