Journal
ENERGY POLICY
Volume 137, Issue -, Pages -Publisher
ELSEVIER SCI LTD
DOI: 10.1016/j.enpol.2019.111150
Keywords
Electricity; Competition; Retail market; Regulation; Italy
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Italy will phase out electricity retail price regulation by July 1st, 2020. Until then, residential customers and small businesses who do not choose their supplier are served under a regulated tariff named maggior tutela (greater protection), supplied by the local distributor at a price set by the regulator. We review the literature on electricity retail competition - with particular regard to its expected effects on prices, innovation, and customer engagement - and the conditions under which competition is expected to deliver benefits. We perform a Structure-Conduct-Performance analysis of Italy's retail electricity market for residential customers, finding two issues potentially problematic: excessive market concentration and low customer engagement. We propose a phase-out mechanism that relies on graduality, asymmetric regulation, and a mandatory, opt-out collective switching exercise. The mechanism aims to rapidly reduce market concentration by leveraging behavioral incentives to customers to switch to the cheapest supplier.
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