by Keith Baker and David Toke
In 2013, Britain’s electricity markets were reorganized through Electricity Market Reform (EMR). The programme of EMR sought to prioritise the public goods of energy security and climate change mitigation. This marked a shift away from free markets towards a greater role for state direction in the energy market.
In our Policy & Politics article entitled Electricity Market Reform: so what’s new? we use grid group cultural theory to explain changes in the regulatory regime under EMR. Cultural theory claims that regulatory actions result from more cultural biases: individualism, hierarchy, egalitarianism and fatalism. Individualists privilege free markets, hierarchs privilege expert and government authority, egalitarians emphasise equity, the environment and community lead decision-making and fatalists are resigned to carious fate. We claim that EMR represents an incomplete shift from ‘individualist’ to ‘hierarchical’ approaches to the regulation of the British energy market.
We argue that conflicts between the different frames explain the institutional design of EMR. Whilst the egalitarian bias is implicit in the drive for decarbonisation and support for renewables, a hierarchical bias and panic over an electricity shortage is driving the government towards nuclear power. However, the British government continues to persist with a preference for commercial markets. As such, government tries to work through incentives but reserves the right to distort the market through these incentives. This set-up is very distinct from the old arrangements under the nationalised electricity system. It is also different from the centralised decision-making desired by some supporters of nuclear power.
David Toke is a Reader at the University of Aberdeen. Keith Baker is Assistant Professor of Political Science at Oregon State University, US.
If you enjoyed this blog, you may also be interested to read Towards a model of the intervention process by Michael Lewis, Niall Piercy, Wendy Phillips and John Palmer.