Last Resort Supplier and Competition in the Retail Electricity Market
12:00 - 13:00
The definition of good practices to govern the transition to competitive market conditions is a problem of great political relevance that all governments and regulators have to face when liberalizing utilities markets. This paper explores the idea that regulations designed to implement Universal Service Obligations can be used to ease the entrance of competitors in newly liberalized services of general interest. Namely, we focus on the design of liberalisation policies in markets where competition is superior to a regulated monopolist, but barriers to entry due to some mix of consumer ignorance and switching costs can reduce the competitive pressure. The paper is inspired by what happened in the Italian electricity sector after the retail market has been fully open to competition. However, the majority of the discussed issues can be easily applied to other services of general economic interest interested by the same reform process.