مطالعه موردی تجزیه و تحلیل عملکرد تنظیم مقررات : صنعت برق انگلستان

The success or failure of the privatisation and liberalisation of electricity supply industries has more often been judged in terms of process than of outcomes. In this paper, in contrast, this performance is assessed in terms of the performance of its associated system of regulatory governance. Taking the UK's electricity supply industry between 1989 and 2000 as case study, initially, a vertical cross-section of the regulation system gives a finding matrix for the various stakeholders involved and identifying winners and losers from the standpoint of funding flows. Next, a horizontal cross-section provides the environmental, distributive, allocative, dynamic and productive efficiencies grid for this system. The survey shows that the performance of the British ESI regulation system produced benefits, although not for all stakeholders and not as fairly as possible. The chosen path did not seem sustainable and failed to respect intergenerational transfers as a way of fostering sustainability and equity. It was unable to underpin simultaneous improvements in efficiencies over time, while redistributing industry's funding flows among the players in a regressive manner.

1.1. Overview prior to the reform of the British electricity supply industry Prior to 1989, the British electricity supply industry (ESI) was a public monopoly consisting of (1) the Central Electricity Generating Board (CEGB), which supplied more than 95% of total bulk electricity and owned almost all 78 generator plants and all transmission assets, (2) 12 independent Area Boards, each in charge of distributing electricity within their geographical concessions, and (3) the Electricity Council, which was the energy advisor to the government, in charge of controlling general levels of this industry's taxes and finances. Through the National Grid Control, the CEGB was entrusted with centralised operations (merit order) through which each power generation unit was dispatched by lowest operating cost until all demands were met. Under Mrs. Thatcher, the Conservative Party criticised the general structure and public monopoly status of the ESI, remarking that: (1) this structure was rigid, bureaucratic, inefficient and hard to reorganise due to political clout, (2) there were few and inadequate tools available for enforcing sanctions able to avoid requests for new funding and tariff increases, (3) supplies were at risk because of strike threats and fuel crises (Newbery, 1994). These criticisms became louder, in parallel to discussions about the role of the State in the ESI. In June 1982, the Right Honourable Nigel Lawson MP, Secretary of State for Energy, stressed that the government role is to define a framework ensuring that the market can command the energy sector with minimal distortion and energy can be produced and consumed in an efficient way (Department of Energy, 1982, p. 3–7). According to the facts, Britain's ESI reform set up a new industrial organisation in 1989, altering its ownership structure, trade agreements, and industry institutions. 1.2. Unbundling and privatisation The CEGB was separated into three generation utilities (National Power, PowerGen and Nuclear Electric) and one transmission utility—the National Grid Company (NGC), with the distribution grid allocated on a regional basis to each of the 12 Regional Electricity Companies (RECs), defined by the earlier Area Boards (for more see Armstrong et al., 1994; Newbery, 1994). National Power was assigned 46% of all generation capacity in England and Wales, while PowerGen received around 28% (both privatised on March 1991). Almost 17% consisted of nuclear power (transferred to Nuclear Electric, remaining public until 1996), just 1% was generation by independent producers (IP), and the remainder consisted of other sources, including imports from France and Scotland. The RECs were privatised in December 1990, before the generation utilities. In addition to the distribution business (still a regulated natural monopoly) the supply segment (marketing) was set up and gradually deregulated. The RECs agreed to supply each franchising area until 1998, while holding the monopoly over consumption of under 100 KWh. From 1998 onwards, all consumers were free to choose their suppliers, while the RECs had more flexibility for purchasing electricity from existing plants, including imports form France and Scotland, or building their own facilities as independent producers. Under this agreement, any plant had the obligation to generate. The aim of the reforms was to prune away as many barriers as possible that were slowing entry to the generation business, with no types of intervention established (HC, 1988). 1.3. Pool mechanism The transmission business was kept as a regulated natural monopoly, although private. Third party access was settled (actually, it was established unsuccessfully in 1983) together with the common carriage system guaranteeing the same tariffs for grid owners and non-grid owners. The transmission assets were initially transferred to the RECs through the NGC, which inherited centralised dispatch and transmission grid operations (which remained unchanged). The belief that the RECs would have the incentive of searching for lower-cost generation sources and thus foster competition in the generation business was discredited. In 1995 the Regulator (Office of Electricity Supply) forced the RECs to sell their shares in the transmission business, when this segment was separated from the distribution area ( Midttun and Thomas, 1998). The commercial relations among the power generation utilities, NGC and the RECs were enforced by contracts under the Electricity Pool of England and Wales (the Pool). The Pool set up a trading agreement in order to form the clearing price—calculated by balancing all traded power from generators and suppliers (and free consumers). As the Market Operator, the NGC was in charge of both the operations and management of the Pool. 1.4. New regulatory framework The Office of Electricity Supply (Offer) was created as an autonomous, independent regulatory body headed by the Director General of Electricity Supply (DGES). The aim of the Department of Trade and Industry (DTI) while setting up the Offer was to avoid political intervention in regulation management, promoting a competitive market and protecting consumers while competition was not yet consolidated or where the natural monopoly was still valid (in the transmission and distribution businesses) ( HC, 1996, Section 11). A new governance structure came together with the Offer. The Monopolies and Mergers Commission (MMC) functioned as an arbitrage tribunal for settling disputes between Regulators and utilities; through its Committees, the House of Commons (HC) oversaw the accountability of the Regulator; and the Consumer Committees were responsible for dealing with consumer claims. Following these changes, criticisms of reform performance ushered in important (re)arrangements during the 1990s. 1.5. Review of the electricity trade agreement, vertical re-integration and diversification The market power of the generators (PowerGen & National Power) in the Pool forced the Regulator to intervene, as explained by Green (1996) and Newbery (1997). The Regulator itself (see Offer, 1998) admitted that complex Pool mechanisms allowed the market power and justified: (1) poor price signalling and inadequate performance as a shadow market ( Midttun and Thomas, 1998, p. 191), (2) the lack of players and participation during the first 5 years ( Midttun and Thomas, 1998, p. 191), (3) the lack of transparency for operations ( Offer, 1998, p. 13), and the (4) excessive information required ( Offer, 1998, p. 13). The strategy of multi-plant generators with massive market shares (Green, 1991), the contracts for difference) (CfD) mechanism blocking entrance (Green, 1998, p. 6), the weakness of market settlement allowing manipulation by Capacity Payment ( Exelby and Lucas, 1993), the tactics of collusion to ‘run’ transmission capacity restrictions ( Green, 1996, p. 11), the flexibility of the market for combined cycle gas turbines (CCGT) plants that could run on both electricity and gas ( Offer, 1998, p. 19, 21), the fact that most of the CCGTs were jointly owned with the RECs (vertical re-integration) or the major generators ( Green, 1996), and finally, the inertia of the Pool governance, which proved unable to introduce improvements ( HC, 1997, p. 84), among other factors, all led to the new electricity trade agreement. The Utilities Bill (2000) constituted the New Electricity Trade Agreement (NETA) and some new regulations increasing the power of the State to intervene in the market (through the Secretary of State) and in the licenses of the utilities. There are still doubts about the efficacy of NETA for lessening price manipulation by the generators (see Green, 1999; Wolfram, 1999; Bower and Bunn, 2000; Macatangay, 2001). Acquisition and diversification dynamics helped redesign the original industrial organisation. Kennedy (1997) argues there had always been a latent desire among the utilities and indulgence from the Regulator for starting a mergers and acquisitions process. In fact, Midttun and Thomas (1998) and Wright and Thomas (2000) point out that cross-capital ownership has been increasing since the mid-1990s, meaning vertical reintegration might represent ‘natural forces’ engaged in reducing transaction costs. Diversification was also intense. By year-end 1997, 5 of the 12 RECs and National Power had already purchased telecommunications enterprises, and both Norweb and South Wales Electricity had already joined up with water utilities; all 12 RECs and the generators had already bought up natural gas distribution businesses (EIA, 1999, p. 12). 1.6. Redefining the regulatory framework In 2000, the DTI determined the merger of Offer and Ofgas (the Gas Regulator), resulting in the Office of Gas and Electricity Markets (Ofgem), with structural changes introduced in 2000 through the Utilities Act. Centralised management under the Director General was replaced by a Board; its name was changed to the Gas and Electricity Market Authority and its sphere of action was extended to include both gas and electricity regulation. At the moment, its rights and duties are established under the Gas Act (1986), the Electricity Act (1989) and the Utilities Act (2000). It is noteworthy that the Utilities Act (2000) strengthened consumer rights and underpinned environmental and social issues, including government powers of intervention for establishing cross-subsidies to assist the poor when their needs were not properly met. The Monopolies and Mergers Commission (MMC) was replaced on April 1, 1999 by the Competition Commission, under the Competition Act (1998). The new Commission added to the previous role of the MMC the task of judging appeals (Appeal Tribunal) lodged against decisions handed down by the Regulators or the Director General of Fair Trading (DGFT). Until the late 1990s, consumers were protected by the Electricity Consumers Committees. However, because these Committees were officially linked to the Regulator, they were not independent enough to criticise any Regulator decisions and enforce best practice regulations ( HC, 1996, Section 166). They were abolished by the Utilities Act (2000) and the Gas and Electricity Consumer Council (EnergyWatch) was set up as an independent consumer organisation empowered to protect all consumers from the electricity and gas industries. 1.7. Assessment of regulatory performance Britain's Energy Policy has traditionally focused on three major priorities: (1) guaranteed secure and adequate supplies (fuel and source diversification), (2) efficient energy use (throughout the entire industry chain, including energy conservation), and (3) lowest possible costs (of energy supply) for the nation (Bending and Eden, 1984, p. 273). Moreover, British Energy Policy must support other policies: Social Welfare, Environment, National Security, Foreign Policy and International Cooperation (Department of Energy, 1978). As already stated, Britain's ESI Reform defined a new strategy for reaching these objectives. Did the Reform actually attain its targets? How effective has it been for promoting efficiencies and Social Welfare?—taken as a world improved if the scale of the gains and losses mean that winners can fully compensate losers for their losses and still be better off themselves (Kaldor–Hicks criterion for Pareto improvements). How were the stakeholders affected? Did the Reform stress intra- and inter-generational transfers as a way of fostering sustainability and equity ( Stavins et al., 2002, p. 4)? Most studies assessing the British Reform did not approach these issues together. In fact, the success or failure of the privatisation and liberalisation of electricity supply industries has more often been judged in terms of process than outcome. Moreover, when the results have been on the agenda, their analyses may generally be characterised in terms of more or less satisfactory ‘pure price’ analyses (e.g. Turvey, 1997; CRI, 1998a), in which ‘counterfactual’ price analyses have also played their part (e.g. Yarrow, 1992; Branston, 2000) and fuller cost benefit analyses (e.g. Newbery and Pollitt, 1996; Galal et al. ,1994; Jones et al., 1990). In contrast, this analysis attempts to evaluate the performance of the British ESI in terms of the performance of its associated system of regulatory governance. As shown by Train (1995) there is a trade-off among efficiencies that is resolved through social priorities defined in political terms, according to Jaccard (1995). However the process of selecting these social priorities is part of the regulatory game, where the functioning of the regulatory governance is of the utmost importance, as already shown by various authors (see Stern and Holders, 1999; Berg, 2001). When defending its cluster of preferences, each group of players tries to influence not only the Regulators but also regulatory governance. This process determines the path of development of the ESI where the blend of the strategies deployed by these groups produces a matrix of earnings for each group and a matrix of impacts for the environmental, social and economic systems. In order to evaluate the performance of Britain's ESI, a systemic approach is applied to its efforts between 1989 and 2000. Initially based on a vertical cross-section of the British ESI Regulation System, this gives a findings matrix for the various groups involved (consumers, investors, suppliers, consultants, employees, regulator and government) and identifies winners and losers from the standpoint of funding flows. Next, based on a horizontal cross-section of the British ESI Regulation System, the performance of the Reform was tested according to its ability to: (1) ensure that current outlays of natural capital and the use of natural services do not adversely affect the possibility of meeting the needs of future generations (environmental efficiency) ( WCED, 1987), (2) ensure better equity (distributional efficiency) among stakeholders ( Stavins et al., 2002), (3) prevent the misuse of resources within the energy sector and among economic sectors (allocative efficiency) ( Train, 1995), (4) compel technological and administrative innovations to be sought out and brought into the industry (dynamic efficiency) ( Train, 1995), and (5) induce organisations to accomplish their tasks at the least possible cost (operational efficiency) ( Train, 1995). This approach widens the scope of regulatory performance analyses and helps bring the sustainability-based approach on to the agenda for discussion. It might well also serve as a guide for regulatory impact analyses during both the design and implementation processes for infrastructure reform. This paper is divided into four parts: Introduction, Winners and Losers, Attaining Efficiencies, and Conclusions.