Trust and Transparency in Electricity Distribution - The Role of Social Responsibility Disclosures in Natural Monopoly Market

Electricity distribution companies (DSOs) are natural monopolies in their respective network areas. Ownership varies, from private companies to consumer cooperatives to some form of public sector ownership. A core challenge for all actors in the electricity sector is dealing with change arising from climate concerns. Among these, the timing of consumption is considered very important, and the price of electrical power is important in determining total price. Dealing with price variation is routine for large consumers but an unintelligible black box for households. Shifting household electricity consumption is the objective of dynamic tariffs used by some electricity transmission companies. However, even if households were able to respond to dynamic tariffs, they would need to trust their electricity distributor to follow their advice. Trust depends on understanding the fundamental character of the business to be trusted, in this case, the distributor company. Whereas the natural monopoly character of the distribution company is well understood in economics and regulation, households are not as well informed. This paper starts with the link between households and electricity distributors. It investigates the disclosures related to social responsibility as an indicator of the extent to which distribution companies disclose information about their special market character to households. We use disclosures made to regulators to comply with the EU CSRD directive regarding the Corporate Social Performance of Companies to trace whether or not distributors acknowledge their monopoly characteristics.