Essays on Why Governments Regulate Energy Industry in the UK Case Study

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The paper "Why Governments Regulate Energy Industry in the UK" is a good example of a business case study. The current economic crisis has affected the Western world in fundamental ways; there is stagnation in the US economy and the Eurozone is experiencing one crisis after another. It is quite possible that the UK will fall back into recession. The current economic downturn is not just a crisis but a paradigm shift in value that was precipitated by unwarranted fiscal speculation and encouraged by the imprudent political decisions of the last twenty years.

Many of the current problems have been blamed on capitalism (Norman, 2011). This matter concerns the public in fundamental ways. For about thirty years, the British economy has been open, since the Thatcher government decided to float sterling, do away with subsidies from the state, dismantle cartels and enable privatisation of many industries including the energy sector and facilitate deregulation of London City. In order to gauge the acceptability of a system of regulation, it is necessary to define the yardsticks by which it will be judged.

Three potential elements exist in any new system of energy network regulation according to Pollitt (2008). In the first place, the role of the regulator within the process may undergo a paradigm shift in the future to an emphasis on ‘ constructive engagement’ as well as ‘ negotiated settlements’ between consumers and purveyors of network services. This would result in a change in the decision-making process where the role of the regulator in investment selection is reduced and greater inclusion of all parties involved in the decision on which investments to make.

A further consideration to be made is the minimisation of the monopoly right of the incumbent by facilitating the generation of competition through competitive tendering. Elements within the network need to be examined for their potential contestability or competitiveness and these must be excluded from the monopoly price controls. Thirdly, the impact of climate change must be taken into account in line with the government’ s greenhouse gas emission reduction targets. This essay will seek to examine the effects of deregulation of the energy sector from the point of view of the consumer in an attempt to gauge whether the consumer has derided any benefit from it.

This essay will also seek to discover whether there is an oligopoly that is taking advantage of the consumer and what can be done to minimise this. The British Model The competition was introduced in the British electricity industry in 1990, and the resultant reforms were known as ‘ privatisation’ although other jurisdictions refer to the same phenomenon as liberalisation or deregulation. This ‘ British Model’ was looked at as a success and many other economies attempted to duplicate it. This perception of success was mainly fuelled by the significant decrease in electricity price that occurred without the compromise of quality of service.

There seems to be a widespread presumption that the services provided by private entities were of better quality than those offered by their public counterparts. The European Union seems to have taken this to heart and justify the facilitation of competition for the supply of electricity under the premise that it is a basic right rather than that it promotes better service delivery (Thomas, 2005).


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