Paul Nillesen

The Consequences for Consumer Welfare of the 2001-2003 Electricity Distribution Price Review in The Netherlands

The Dutch regulatory process for setting the first X-Factors in the electricity distribution sector has gone badly wrong. During two-and-a-half years four different X-Factors were published by the regulator. These X-Factors fluctuated wildly. We demonstrate that Dutch electricity consumers will pay at least €300mln. more over three years for the distribution of electricity than might otherwise have been the case. We estimate that benefits for companies in terms of extra revenue from lowered X-Factors amounts to 3~5 percent of total asset value. We provide a history of the regulatory process and analyse the impact of the different X-Factors on the final bills of consumers. The negative political reaction to the perceived problems of regulation has hampered the course of deregulation and the privatisation of the municipally-owned electricity companies. The Minister of Economic Affairs and the majority of Parliament want the complete ownership unbundling of the sector by 1 January 2007.

New Utility Business Model: A Global View

Abstract This chapter examines the response to the surge in distributed energy resources (DER) and prosumers by traditional utilities. Using the results of a comprehensive survey of senior management of major utilities around the world, conclusions on the major threats and opportunities are drawn. Although the creation of new markets, new niches, and new entrants might suggest the demise of big and established utilities, this chapter suggests that they might be able to survive and thrive by scaling up and exploiting the new business opportunities—provided that they make the right moves at the right time. Otherwise, the emergence of “platform” markets might lead to intermediaries capturing the value of interactions among the stakeholders before the utilities do. The critical skill for the traditional players will therefore not be in creating new business models, but rather in identifying and cultivating them in mass-market scale. The authors point out some of the new entrants already appearing to challenge the established players.

New Business Models for Utilities to Meet the Challenge of the Energy Transition

Abstract This chapter discusses a set of possible business models that traditional utilities or new entrants can deploy in order to succeed in the changing energy market. The business models are derived from emerging market models that, in turn, are influenced and shaped by the megatrends driving change. The chapter highlights relevant examples, and the capabilities required to succeed. The business models discussed include pure play merchant, gentailer, grid developer, network manager, product innovator, value-added enabler, and virtual utility. For each business model the required capabilities are discussed.

Becoming a Best-Practice Company: The FPL Story Revisited

Abstract The Florida utility has focused on benchmarking, cost control, and re-engineering since the early 1990s. Data envelopment analysis benchmarking can identify the gains in operating and maintenance expenditures, re-engineering capital and associated expenditures, and scale expansion.

A Global Perspective on the Long-term Impact of Increased Energy Efficiency

This chapter provides a global perspective on the development of energy efficiency by analyzing the experience in 65 developing and developed countries since 1971. Total energy consumption and electricity consumption have increased worldwide, but have declined in relation to the GDP. The decline in energy intensity has been more pronounced in developed countries. Changes in economic structure have had an upward effect on energy intensity, but this has not been a major driver. On balance, energy intensity has converged over time, but the causes of convergence differ between countries. The results point towards the absence of Kuznets-type relationships between economic development and energy intensity, which may be the result of the diffusion of new techniques and knowhow among countries. Nevertheless, energy consumption is still expected to increase significantly in the coming years, highlighting the significant potential benefits of improving energy efficiency.