01/01/2002 Business Economics
DOI: 10.1016/B978-075065096-0/50020-X SemanticScholar ID: 167938091 MAG: 2235296431

Competition in energy supply

Publication Summary

It has traditionally been the case that gas and electricity utility companies, irrespective of ownership (i.e. state or privately owned), are natural monopolies, which are regulated by legislative measures. These monopolies evolved partly because of the high infrastructure costs associated with the transmission and distribution of gas and electricity, and partly because it was easier to manage and regulate utility companies which generated/supplied, transmitted and distributed electricity or gas. Indeed, it is difficult to imagine anything other than a monopoly, given that most buildings have only one physical connection to a gas pipe and another to an electricity cable. However, while monopolistic utility companies are relatively easy to control and regulate, they prevent competition in the energy market. Consequently, it is not possible to buy and sell ‘bulk’ energy in the same way other commodities are traded.

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