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Competitiveness

The absence of a single satisfactory measure of competitiveness in energy markets and the differing characteristics of the gas and electricity markets means that an assessment of energy market competitiveness is not straightforward.

BERR has a Public Service Agreement target to: "Ensure the UK ranks in the top 3 most competitive energy markets in the EU and G7 in each year". In order to inform the measurement of this target, a methodology has been developed by OXERA on behalf of BERR, based on indicators of energy market liberalisation at each stage of the supply chain (upstream, wholesale markets, network and retail) and applied to energy markets in the EU and G7. The methodology has also been reviewed by independent energy market experts. Application of the methodology is repeated each year in order to inform the PSA target on an annual basis and the annual reports produced so far, and which are available below, suggest that the UK is the most competitive energy market in the EU and the G7.

• This report confirms the preliminary findings that the UK had the most competitive energy markets in 2005:
  
  Energy market competition in the EU and G7. Final 2005 rankings  (563KB)
  URN 08/P44
• The latest report confirms that on the basis of the preliminary rankings for 2006 the UK continues to meet the PSA target:
  Energy market competition in the EU and G7: preliminary 2006 rankings  (559KB)
  URN 08/P42
• This report examines projections for future competitiveness rankings and concludes that while the UK's top ranking may be threatened by Sweden, achievement of the PSA target appears likely up until 2011:
  
  Forward projections of energy market competitiveness rankings  (165KB)
  URN 08/P43