Regulating opportunism in the electricity industry and consumer interests

This article presents evidence on opportunistic behaviour by network operators in the liberalized British, Dutch and French electricity industries. The evidence is supplied by 303 regulatory decisions on dispute resolutions for the period 2002–2010. We observe a significant difference in how the regulators resolve disputes between network operators and producers on the one hand, and between network operators and consumers on the other hand. Consumers are negatively affected by the opportunistic behaviour of network operators, mainly by paying tariffs that are higher than is allowed by law. Policy recommendations focus on the protection of consumer interests in competitive electricity markets.

► We provide evidence of opportunistic behaviour by operators of electricity networks. ► Regulatory decisions on dispute resolutions display opportunism. ► Producers have an information advantage in response to opportunism. ► Consumers are negatively affected by opportunism. ► Consumer protection should be improved in competitive electricity markets.