Ranking the competitiveness of retail electricity and gas markets at national level in the members states of the European Union and in Norway
Agency for the Co-operation of Energy Regulators
European Union and Norway
The Agency for the Co-operation of Energy Regulators (ACER) commissioned IPA to develop a method to rank the competitiveness of retail energy markets in the EU28 and Norway and to pilot the method for a few countries.
IPA initially conducted a literature review, to support the identification of potential indicators of competition in retail energy markets and inform the methodology by which these could be combined into a composite indicator of competitiveness, which could be used to rank the countries.
IPA developed a long-list of indicators and a framework for evaluating their relevance and quality, and discussed these with ACER, the Council of European Energy Regulators (CEER) and representatives of the National Regulatory Authorities (NRAs). Incorporating the views of ACER, CEER and the NRAs, IPA identified a final list of indicators of retail energy market competition.
IPA then developed a methodology for combining these indicators, which was discussed at an early stage of its creation in a Workshop in Brussels with ACER, CEER and the NRAs. In brief, this method included assessing the completeness of the data underlying the indicators and means for filling these gaps; analysis of the data series (for outliers and for relationships between them); data normalisation (i.e. converting the data into common unit of measure that can be aggregated); weighting the indicators based on an expert judgement of their importance; aggregation of the indicators; and the means by which the robustness of results could be considered (including a Monte Carlo analysis). For key decisions in the methodology, different approaches were identified and assessed, and the final choice justified. The methodology was presented in a report, accompanied by a tool for calculation of the composite indicator.
IPA’s report has since been published on ACER’s website.