What are the grounds for electricity markets deregulation?

Pierre-Olivier Pineau
Systems Analysis Laboratory (Finland)
École des Hautes Études Commerciales (Canada)

Raimo P. Hämäläinen
Systems Analysis Laboratory (Finland)

Arguments for electricity market reforms used by governments and international agencies are not often studied. We survey them to show that they are all based on the same economic principle, which supports competition. This principle is explicitly stated here, in the perspective of the electricity industry. However, the review of real deregulation processes in different countries, and a more throughout presentation of the Finnish case, show that reaching the goal of reforms, efficiency through competition, is not so straightforward. This conclusion is supported by many research results found in the energy economics literature. We present the main methodologies used in these works (econometrics and simulation) and summarize their conclusion concerning the outcome of electricity market reforms.