ENERGY REGULATION AND POLICY - 2017/8

Module code: ECOM038

Module provider

Economics

Module Leader

HUNT LC Prof (Economics)

Number of Credits

15

ECT Credits

15

Framework

FHEQ Level 7

JACs code

L190

Module cap (Maximum number of students)

N/A

Module Availability

Semester 2

Overall student workload

Independent Study Hours: 128

Lecture Hours: 22

Assessment pattern

Assessment type Unit of assessment Weighting
Coursework COURSEWORK - 2000 WORD ESSAY 25%
Examination EXAMINATION - 2 HOUR 75%

Alternative Assessment

Not applicable

Prerequisites / Co-requisites

None

Module overview

This module will examine the use of regulation in the Gas and Electricity network industries and general energy policy. The module is divided in four parts. The first part introduces a basic market which is extended to include specific features of the energy sector, and then discusses the principles of energy pricing. The second part considers the regulatory issues in the energy sector, from traditional ideas to modern regulatory focus. The third part presents different approaches to reform and restructuring the energy sector. Finally, the fourth part discusses current energy policy issues. Although the principal focus will be on the UK experience, overseas examples will also be discussed, including developed and developing countries.

Module aims

Provide students with a solid, well rounded perspective of the issues faced by regulators when regulating the gas and electricity industries both in the UK and abroad

Provide students with an understanding of energy policy both in the UK and abroad

Learning outcomes

Attributes Developed
Understand the main features of gas and electricity industries and the need of having them regulated K
Understand the different types of regulations and their theoretical outcomes K
Be aware of the liberalisation reforms of the electricity and gas supply industries of last two decades K
Be aware of the aims and objects of energy policy K
Demonstrate independence in planning and writing an academic essay on energy regulation PT
Analyse a country-specific energy regulatory environment, highlighting the strength and the weaknesses of its features C
Select and cite properly relevant references and data PT
Communicate effectively in prose and numerical form to specialists and non-specialists PT
Develop ability to apply the tools of economic analysis to energy policy issues CP

Attributes Developed

C - Cognitive/analytical

K - Subject knowledge

T - Transferable skills

P - Professional/Practical skills

Module content

Part 1. Energy Markets and Principles of Energy Pricing (Weeks 1-2)


Basic competitive market and extensions to characterised the energy market: indivisibility of capital; asset specificity and capital intensiveness
Natural gas and electricity markets
Market failures: monopoly problems, natural monopoly and rationale for regulation
Alternative pricing principles: two-part tariffs, Ramsey-pricing, peak load-pricing
Energy taxes and subsidies


References: BHA chap 12, 13 and 15; EH chaps 17 and 20.

Part 2. Regulation of Energy Industries (Weeks 3-5)


Traditional regulation (rate level and rate structure) and its problems
Incentive regulation: Price-Cap regulation and Revenue Caps
Yardstick competition
Performance Based regulation
Regulation in practice


References: BHA chap 28; EH chap 21, NW chap 2.

Part 3. Reform of the Energy Industry (Weeks 6-8)


Rationale for Deregulation
Introducing competition for/in the market
Restructuring options:

vertically integrated monopoly
entry of independent power producers
wholesale competition: pool, open access
retail competition and some issues of consumer behaviour


UK Gas and Electricity since privatisation


References: BHA chap 29; EH chaps 26 and 28; NW chaps 5, 6 and 8.

Part 4. Current Energy Policy Issues (Weeks 9-10)


Energy security and climate change
Renewable policy and CO2 mitigation


References: BHA chap 20; EH chaps 16, 32 and 33.

In week 11 we will revise the most important material in preparation for the exam.

Methods of Teaching / Learning

The learning and teaching strategy is designed to:


enhance, extend and enrich students’ knowledge and understanding of energy industry regulation and of energy policy, providing them with the instruments to work in energy industries, consultancy firms, national and international policy-making institutions;
equip students for the requirements of undertaking research in the field of energy at doctoral level;


The learning and teaching methods include:


2 hour lecture per week x 11 weeks

Assessment Strategy

The assessment strategy is designed to provide students with the opportunity to demonstrate:


Understanding of the main features of gas and electricity industries and the need of having them regulated
Understanding of the different types of regulations and of their theoretical outcomes
Awareness of the liberalisation reforms of the electricity and gas supply industries of last two decades
Awareness of the aims and objects of energy policy
Independence in planning and writing an academic essay on energy regulation
Ability to critically analyse a country-specific energy regulatory environment
Ability to select, collect and cite properly relevant references and data
Ability to communicate effectively in prose and numerical form to specialists and non-specialists


Thus, the summative assessment for this module consists of:


2 hour examination scheduled in Weeks 13-15: the exam paper will contain two sections. The first section will have five questions from which three must be answered (each worth 15%). The second section will contain three essay questions from which one must be chosen (worth 55%).
Coursework: 2,000 word individual essay on gas/electricity regulation, typically due in Week 9


Formative assessment and feedback

During the module students will receive feedback on their take-home essays. The essays will be marked and some written comments will be provided.

Reading list

Reading list for ENERGY REGULATION AND POLICY : http://aspire.surrey.ac.uk/modules/ecom038

Please note that the information detailed within this record is accurate at the time of publishing and may be subject to change. This record contains information for the most up to date version of the programme / module for the 2017/8 academic year.