Regulatory and market disharmony in the Turkish electricity industry

Abstract

We examine the regulatory and market disharmony in the Turkish electricity industry revealed in the course of introducing competition in retail supply. We specifically show that the design of the support mechanism for renewable energy resources and the level of regulated retail tariffs have left little room for the viability of retail competition in the electricity sector. While the cost of the support mechanism has increased the cost for retail suppliers, the regulated tariffs prevent them from reflecting this cost increase in their prices and from providing commercial offers. This induces customers to switch back to their default regulated tariffs.