The Liberalization of the Electricity Sector: The Customer’s Role and Savings

Changes in Public Services
By Marcelo Saguan, Olivier Sautel

The liberalization of the electricity sector has been one of the most contested reforms in public sector restructuring. The fate of the end customer in this sector is still highly debated. This paper evaluates efficiency gains generated along the vertical supply chain in the electricity sector and investigates the role and the savings of end costumers in the reform process. We show that the continuing debate over the best form of liberalisation, based around the total or partial opening of retail electricity, is justified given the contrasting outcomes of electricity reform. While the end customer has benefited from some efficiency gains that have been partially passed on by the actors of competitive markets, their possibility to choose their own electricity supplier has not significantly contributed to the level of these gains. The paradox of competition without end customer choice could last if certain conditions regarding innovation in electricity distribution are not met.

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