Energy regulation and Consumers' interests: final report

This report is the final product of a two-years research project funded by the European Commission, DG Sanco (Grant agreement 17.020100/05(04)408149) on the protection of energy consumers. More specifically, the Commission asked to: - List the competencies of National Regulatory Authorities regarding issues related to consumption in a general sense; make a comparison among Member States (are consumers considered homogeneously by NRAs? Have consumer associations a specific role?); - Evaluate and compare quality and added value of the NRAs' intervention to the benefit of consumers; collect concrete/practical examples; identify good practices as well as shortcomings; - Clearly illustrate useful recommendations, in order to have the NRAs consider consumers issues thoroughly. To accomplish these objectives, we proceeded as follows: a) Firstly, we collected national laws and regulations implementing the first and second electricity and gas directives; b) Secondly, we sent a questionnaire to each of the nine partners in this project and asked them to describe the main characteristics of their national energy systems, with a special emphasis on the measures aimed at protecting residential electricity and gas consumers in the new environment created by the liberalization process; c) Thirdly, we used the information collected to evaluate the effects of the liberalization process on the welfare of residential consumers and to advance some recommendations. The research project was conducted between July 2005 and June 2007. Federico Boffa wrote chapter six, while Giuseppe Bellantuono wrote the remaining part of the report. The first chapter describes the methodology employed to analyse residential energy markets. It highlights the incentive structure of legal rules and the need to assess the relevance of regulatory institutions according to the legal tradition of each country. The second chapter describes the main problems regulators shall tackle in residential energy markets. While they are not exclusive to such markets, it is suggested that they could be more difficult to solve than in other settings. The third chapter lists the national energy laws and regulations implementing the second electricity and gas directives in the 27 Member States. The fourth chapter describes the experiences of those countries that liberalized residential energy markets earlier than the European deadline. Problems encountered and solutions experimented could be very interesting for all countries that open their residential markets by 1st July 2007. The fifth chapter describes the regulatory systems in partner countries, with specific reference to the institutions of consumers representation and the distribution of regulatory powers. The sixth chapter discusses the evolution of retail energy prices in partner countries since the beginning of liberalization and its distributive impact on different categories of consumers. The seventh chapter describes the main terms of residential energy contracts and the type of control on their contents. The eighth chapter describes quality regulation, with special emphasis on its impact on consumers’ welfare. The ninth chapter describes energy consumers’ complaints and alternative dispute resolution procedures. The tenth chapter describes the role of consumers associations in energy markets. The eleventh chapter contains final recommendations addressed to the European Commission, to ERGEG and to national regulators.