Liberalizing markets, liberalizing welfare? Economic reform and social regulation in the EU’s electricity regime

Abstract:

This article argues that the European Union (EU) is promoting a liberal model of welfare through social regulation. Focusing on the liberalization and regulation of the electricity sector, the article asks how and for what reasons social protection of vulnerable consumers was introduced into this sector, and what kind of welfare policy this represents.

This article shows that social measures grew substantially between the second and third directives on electricity sector liberalization (2005–2009), advanced by the European Parliament and reluctantly adopted by the Commission. This development runs counter to our understanding of electricity sector reform as focused primarily on liberalization, competition and efficiency.

It is argued that the introduction of social protection advanced the process of economic reform, even when the measures introduced were in themselves inefficient. This social regulation, however, not only reflects a liberal, targeted and minimal understanding of welfare, but also pushes social policy in member states in this same direction.