The Agency for the Co-operation of Energy Regulators (ACER) today published its fourth annual Market Monitoring Report (MMR) for 2014 that reports on the progress made towards the completion of the internal energy market. In preparation for the MMR for 2014, ACER wished to further extend and complement the scope of its retail markets analysis, including the development a composite index with which to rank individual countries in terms of the relative competitiveness of their retail energy markets. It is within this context that ACER commissioned an independent report from IPA, which was today published alongside the MMR for 2014.
Developing this methodology involved several steps. First IPA identified potential indicators of competition in retail energy markets and then developed a methodology by which these could be combined into a composite indicator of competitiveness, which could be used to rank the countries. This method included assessing the completeness of the data underlying the indicators and means for filling these gaps; analysis of the data series; data normalisation; 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. For key decisions in the methodology, different approaches were identified and assessed, and the final choice justified. The proposed methodology is presented in the report that was published today.
IPA offers specialist skills in energy sector policy development and evaluation. IPA’s specialist competition economics, strong analytical and quantitative capability, complemented by our knowledge of energy markets, allows us to develop methods and tools for policymakers and market participants to objectively analyse changing energy market dynamics. For further information on how we could potentially assist you, please contact Jonathan Thurlwell, Managing Principal – Regulation & Policy on 020 7659 9888.