UK's Ofgem Chief: Dereg Doesn't Mean California
LCG, Oct. 11, 2001--Callum McCarthy, head of British energy regulatory body, the Office of Gas and Electricity markets, was in Washington, D.C., yesterday, where he told the European Institute that electric deregulation doesn't necessarily lead to a California-style energy crisis.
"California is not the inevitable result of liberalizing energy markets," McCarthy said. "The British experience, as well as that in the Nordic countries of Europe and individual states in Australia, show that privatization and liberalization can bring very real customer benefits."
McCarthy said the British experience showed quite the opposite -- he said 14 million customers have switched their sources of supply, with 167,000 switching every week. All of those customers, he said, benefit from the downward pressure on prices which competition has brought and continues to exert.
Since the UK privatized and deregulated its energy sector, residential gas prices have fallen 37 percent and residential electricity prices 28 percent, McCarthy said. Today, Britain has a more diverse energy mix than at any time in its history, interruptions are even rarer today than they were a decade ago and generation capacity exceeds demand by almost 30 per cent, he added.
"There is not much, therefore, that is obviously wrong with the way in which the British energy market operates," McCarthy concluded. "Those who search for market failures to correct have some difficulty in identifying what they are. They have even more difficulty in demonstrating that there is an administrative solution which will improve matters."