Theoretical ambiguity and the weight of historical heritage: a comparative study of the British and Norwegian electricity liberalisation

Abstract

Britain and Norway have been European pioneers in liberalising their electricity systems, but they have done so in very different ways. Both attempted to create a system in which the potentially competitive activities, generation and supply to final consumers, were opened up to market forces. However, Britain has liberalised by privatisation leaving generation largely concentrated in a few companies. Norway has maintained a dominant public ownership, but has sought to create a competitive environment through a decentralised production structure. The British ‘capitalist’ and the Norwegian ‘structuralist’ approaches both exhibit clear market oriented features, but with the dynamics placed respectively on the ownership side and on decentralised competition. Yet the two models are also reflections of two historical heritages. The differences in political style help to explain the more dramatic and controversial character of the British reform as compared to the rather pragmatic Norwegian process. The difference between the two reform models also has a bearing on their strengths and weaknesses. The Norwegian model, with its small scale municipal orientation is almost ideal for a competitive free trade market in a closed economy, but problematic in a larger international competitive context. For the British model the concentration and advanced capitalist ownership strategies create regulatory dilemmas, such as the current wave of takeovers, that are not easily handled.