Retail competition in electricity markets

The introduction of competition into retail electricity supply gave rise to great expectations. However, to date, its performance has proven less than stellar, owing primarily to the theoretical concepts underpinning this reform, which draw heavily on the Austrian school. Neither consumers' decision processes nor this sector's technical paradigm were adequately accounted for, leading to an uncorrect estimation of the expected impact of opening to competition. Short- and medium-term prospects for the evolution of retail markets must be reconsidered from the perspective of greater stability: not a generalization of competition, but rattler a persistent segmentation between active and inactive clients: not a large and rapid diffusion of radical innovations in commercialisation, with the potential for undermining the incumbents' positions. (C) 2008 Elsevier Ltd. All rights reserved.