Opening of the Swedish Natural Gas Market: The importance of active customers

Abstract

The natural gas market in Sweden, as well as in Europe, has undergone major changes over the past decade. Through restructuring the market, competition has been introduced in the trading of natural gas. Competition between suppliers can benefit customers through lower prices, better service and more attractive contract terms. When competition in a market is analysed, attention is often only given to the number, size, and actions of the suppliers. However, to achieve the benefits of competition, the degree of customer activity is crucial. In the natural gas market, the customers can act by changing supplier or renegotiating their contracts with the incumbent supplier. Customers who actively assess available options intensify competition between suppliers and are therefore important for the emergence of a competitive market. Low customer participation, on the other hand, may weaken the competition in the market. In Sweden, the rate of customer switching supplier has been very low so far. This may be explain...