Well functioning Competition on Retail Electricity Market

Copenhagen Economics has examined the competition in the Danish retail electricity market.

We conclude that Danish consumers benefit from low prices (measured as gross margin between retail and wholesale prices for electricity), good service and large choice of suppliers and products. We find low switching in the market. This is not surprising since consumers have very low incentive to switch because prices are generally quite low.

The former regional monopolies are gradually losing market shares in their regional areas, but still hold high market shares in their regional areas. The key to enhance competition in the future lies in implementing the new market model (engrosmodellen) which implies that all consumers, regardless of choice of supplier, will only receive one bill and in increasing the transparency on the new price portal which is under development.