New gas in old pipes: opening the UK residential gas market to competition

The United Kingdom is introducing competition to its residential gas and electricity markets, the first such experiment on a national level. This paper analyses the behaviour of suppliers and consumers in the first market to be opened, based on suppliers' posted prices, two questionnaires to consumers and information from the incumbent. The results confirm predictions about the unwinding of cross-subsidies; a surprisingly small proportion of consumers are switching to other suppliers, and they are not evenly distributed across consumer groups, raising important policy questions about the future of regulation in such markets.