Consumer Ownership in Liberalized Electricity Markets. The Case of Denmark

Abstract

The continuation of consumer ownership has been an important part of the Danish electricity reform from 1999. Consumer ownership refers to either a consumer co‐operative or a municipal utility. Contrary to conventional wisdom, consumer ownership can be supported by solid arguments from modern economic theory of organization. These arguments are presented and confronted with both present and future situation in Denmark. The development of the electricity supply industry after the Second World War has emptied consumer ownership of much of its original content. Nowadays, most consumers consider their electric utility as the (monopoly) supplier of a good they demand and not as something they own. Therefore, obligatory consumer ownership as specified in the new Danish Electricity Act of 1999 cannot be relied on to guarantee security of supply and reasonable prices for small consumers