Consumer Welfare in The Deregulated Swedish Electricity Market

The deregulation of the Swedish electricity market in 1996 affected both the market design and the pricing of electricity. Since 1996, the electricity price faced by consumers has increased dramatically. Due to the high electricity price and large company profits, a debate about the success of the deregulation has emerged. As such, the aim of this paper is to investigate whether or not the deregulation of the Swedish electricity market has improved consumers’ welfare. The theoretical framework is an equivalent variation method and the analysis is performed using monthly data for the period January 1996 to January 2007. The results indicate that deregulation has kept the power price (excluding taxes) down and increased consumer welfare in Sweden.