Economics of the Energy Market

26 November 2010

The Director of OVO Energy, Stephen Fitzpatrick, today spoke to U6 and L6 economists on the ‘Economics of the Energy Market’. In the days running up to the talk, British Gas had hiked their prices by 7%, other energy firms had followed with similar rises within days and the regulator OFGEM had just announced another inquiry into the energy market. Having launched OVO in November 2008, Stephen spoke about the difficulties of breaking into a market previously dominated by six large firms and the prevalence of consumer inertia (i.e. consumers’ lack of willingness to switch supplier). The talk covered a wide variety of topics such as privatisation, price transparency, information failures, globalisation, the role of regulators and the division between the production and sale of energy. The talk was not only of intrinsic interest but shed light on how principles learned in class play out in the ‘real world’.