The Net Utility Model –A Goldmine of the net companies? A Stated Preference Study Regarding the net companies Responds and Attitude after Applying the Net Utility Model

Abstract

The Swedish electricity market was deregulated in 1996 and as a consequence of this the net companies are acting on a natural monopoly market. The Net Utility Model was introduced to force the net companies to charge fair prices for the distribution of electricity. The model was developed by the Energy Agency to create an incentive for the net company to increase efficiency and is still under construction.

The purpose of this report is to examine the net companies response and attitudes after that the Net Utility Model is applied. Within that, it is questioned which arguments the net companies present in order to motivating a debit degree of more than 1,0. Further are the net companies’ views of their customers demands examined. This is done by a method called Stated Preference where the respondent is faced with different scenarios and has to choose the best alternative.

The conclusions of the study are that several arguments stressed by the net companies are valid and therefore are allowing a debit degree higher than 1.0. However, the Energy Agency considers that the model already takes these arguments into consideration. On the other hand the net companies stress that the model does not take the arguments enough into consideration. Several of the net companies’ arguments are valid if tested in a competitive market. The net companies do not emphasize the assumed arguments of their customers but stress their own technical arguments.