One of the key aims of the summer school is to locate consumption practices in the context of the social and physical infrastructures of everyday life. The papers in this final session pursue this aim by focusing on the social institutions and socio-technical infrastructures involved in the provision of goods and services. The session combines theoretical reflection and empirical evidence drawn from the utility sectors. The objective is to show how demand for energy, water and the services they provide is influenced not just by consumers’ actions but by the practices of an incredibly wide range of institutions positioned along typically convoluted supply chains.

Processes of industrial transformation, privatisation and liberalisation have led to the re-ordering of utilities, infrastructures, and market relationships. Each of the three papers in this session scrutinises what have become key intersections between consumption and provision within these changing institutional arrangements. In highlighting the range of influences that have a bearing on demand, the papers prompt us to think again about the regulation of utility infrastructures and about the facilitation of environmental innovation within these systems.

Bas van Vliet and Heather Chappells introduce some of the theoretical perspectives that have been employed in analysing the relations between service providers and consumers. Specifically, they reflect on the benefits of adapting a "systems of provision" framework (see Fine and Leopold, 1993) as a means of understanding how demand for energy, water and a range of associated utility services is created and managed. Turning their attention to institutional and environmental changes in these systems, they suggest that processes of ‘differentiation’ are at work which promise to redefine relationships between providers and consumers and to create new contexts for the management and use of energy, water and waste resources.

Tim Moss considers the types of institutional structures and procedures required to support the sustainable management of infrastructure systems and the use of urban land. Taking inspiration from literature on urban and regional development and on technical networks he discusses the case of metropolitan Berlin where economic and political restructuring is changing the scale and spatial distribution of land, water and energy use. With these changes in mind, Tim investigates how far processes of de-industrialisation and have influenced demand for resources in the city and considers the role of the region’s utilities in stimulating demand as a means of improving the efficiency of under-utilised networks.

Finally, Aad Correlje reviews attempts to redesign energy infrastructures within the home. In this he focuses on Dutch efforts to design a framework of social and institutional relations which foster sustainable innovation. In the Netherlands, decisions about energy supply for new housing projects have traditionally been settled by municipalities, project developers and local energy distributors. In recent years this has been unsettled by government stipulations that 'sustainable' energy options be used in large-scale projects. One of the problems, Aad argues, is that these demands have come at a time when market liberalisation and regulatory changes have created a riskier energy supply situation which has in turn restricted definitions of feasible as well as sustainable options. Aad identifies a range of institutional and economic arrangements which promise to re-shape perceptions of more and less viable options.

In acknowledging the intersecting roles of utility companies, planning organisations, regulators, house builders and consumers in creating, maintaining and manipulating demand each of the session papers goes way beyond the analysis of consumer behaviour. Such approaches have practical implications for policy and for the range of actors with whom policy makers interact.

Summaries

Bas van Vliet & Heather Chappells

Conventional understandings of the organisation of utility systems - defined here as those providing energy, water and waste services - require revisiting in light of recent institutional and environmental restructuring. With this in mind, our intention is to review relationships between domestic consumers and their utility systems with the aim of revealing how these arrangements shape demand and frame consumption.

As a starting point we consider the widely held assumption that demand is driven either by the purchasing decisions of consumers seeking to maximise utility by choosing between alternative services on offer, or by the dictates of providers seeking to maximise the efficiency of production processes. We reflect on the way this representation of consumption and production has infiltrated and guided the economic and environmental strategies employed in the energy, water and waste sectors in recent years (Guy and Marvin, 1996).

Concluding that conventional approaches misrepresent relationships between consumers, providers and infrastructures, we suggest an alternative approach. Drawing on the work of Fine and Leopold (1993) we argue that commodities and services find their way to consumers in different ways depending on how specific systems of provision are configured. It is the system of provision that unites a particular pattern of production with a particular pattern of consumption.

Following this logic, we analyse relationships within utility sectors so as to reveal connections between the various material and cultural objects, flows and practices that comprise production, distribution and consumption. This move leads us to think about how the organisation and subdivision of distinctive chains of activity (from generation to consumption) combine to influence patterns of demand.

Having characterised present systems of energy and water provision, we turn our attention to the changes in their institutional and environmental context. In particular, we suggest that processes of ‘differentiation’ are at work and that these promise to change the face of utility provision as we know it. We are, for example, witnessing the differentiation of previously mono-dimensional commodities (where distinctions are drawn between grey and normal water and between green and "ordinary" electricity). At the same time, monopolist providers have been replaced by a multitude of companies competing to provide a range of different services.

In what follows, we unpack four different forms of differentiation each relating to the changing configuration of resources, providers, technologies and consumers. As these layers of differentiation unfold, we consider what each implies for the organisation of systems of provision as conventionally characterised. Pausing to reflect on evidence from the Netherlands and the UK we show how processes of differentiation create new contexts for the management of energy, water and waste resources.

Though the changes are clear, the implications are uncertain. For instance, what does the proliferation of competing energy service companies (ESCOs) mean for initiatives in energy efficiency and demand-side management? Does it imply increased specialisation and improved service in the energy efficiency business or does it place further distance between distributors and generators, isolating them from end consumers and confirming an interest in meeting but not managing demand.

And how are consumer roles being re-written? Conventionally regarded as the passive recipients of uniform services, it appears that we are witnessing the emergence of a more involved consumer. Involvement can take various forms but it is no longer appropriate to view domestic consumers as passive recipients when they take on a myriad of new roles as co-providing partners right along the system of provision.

It is not just a question of organisational change. Technical infrastructures are also being restructured at a range of different levels. At the household we have seen the development of increasingly differentiated devices. For example, the all-consuming dustbin has been supplemented by a range of multi-coloured recycling depositories. But how do arrangements, designed with environmental improvement in mind mesh with established routines? And in any event, how far do they relieve capacity on the waste infrastructure at large?

In re-conceptualising relationships between domestic consumers and utility systems, this paper sheds new light on processes that are defining and re-defining the provision of environmentally significant energy, water and waste services.

Tim Moss

When a large urban site loses its industrial function as a result of economic restructuring it creates a hole not only in the local economy but also in established and entrenched land-use and infrastructure systems. In terms of the site alone the environmental balance is often positive: the use of energy or water drops sharply. From the perspective of the city or urban region, however, disuse of a major site can create major resource inefficiencies, including the under-use of existing technical networks for power, gas and water. This paper explores the interest of utilities and key players of urban redevelopment in finding new users for under-utilised infrastructure built to serve major industrial consumers on what are now derelict sites.

There are several arguments, drawn from various sources, to suggest this interest should be strong and growing. The literature on sustainable urban and regional development has identified the re-use of existing infrastructure networks as an important component of revitalising urban centres and promoting the "compact city". A second body of knowledge on common or public goods identifies technical infrastructure systems as a "network good" whose full (public) value is only achieved when used to capacity. Research on the reconfiguration of urban infrastructure systems following liberalisation by Guy, Graham and Marvin argues that utilities are, for primarily commercial reasons, showing an increasing interest in differentiating between different parts of their networks, seeking to boost demand in the "cold spots" where existing infrastructure is under-utilised.

This paper examines how far these arguments resonate with the interests and experiences of key players of infrastructure and urban planning in Berlin. Berlin provides an ideal setting in several respects. All three of the city’s utilities for power, gas and water/wastewater services have recently been fully or partially privatised and energy markets in Germany are in the process of being liberalised. The degree of commercialisation and commodification of utility services is relatively pronounced in Berlin. Furthermore, Berlin has a large number of derelict sites resulting from rapid economic restructuring following reunification which play an important role in strategies for the development of the city. De-industrialisation has been the principal cause, also, of a sharp drop in water consumption in the city, by some 37% since 1990. Over-capacity – particularly in certain parts of the networks – has become a major concern for the city’s water and sewage managers, in particular.

In my paper I aim, on the basis of empirical research on the Berlin case, to provide some answers to the following questions:

1. How has de-industrialisation affected the consumption of energy and water resources provided by utilities? In what ways has the disappearance of major industrial customers affected the performance of technical networks, technically as well as economically?
2. How far are utilities interested in maximising the use of their existing technical networks? Are they taking a more spatially sensitive approach to infrastructure provision, differentiating between "hot-spots" and "cold-spots"?
3. Do they show any interest in revitalising derelict sites as part of a strategy to stimulate demand in their "cold spots"? What contextual factors or problems frame the way utility managers and urban planners view this opportunity?

Traditionally, the Dutch utilities’ supply infrastructures for large scale building projects have been developed within a formally structured sequence of plans that, in an increasingly detailed manner, determined patterns of land-use, lay-out and design. The participants in this decision-making are driven by a mixture of economic and other motives, in short:

• Municipalities intend to reap maximum revenues from selling building lots, but they also seek to create attractive and affordable - and possibly sustainable - new neighbourhoods. These objectives reflect the functional variation between different municipal departments.

• Housing corporations seek to cover the costs of their housing projects by revenues.
• Project developers seek to maximize their profits, through a quick throughput of houses at reasonable margins. Revenues are often needed to finance later phases of a specific plan. So, developers are risk averse and strive for continuity. Yet, it is also in their interest to secure early involvement in the planning of new housing areas, through maintaining a good image and good relation with the municipality.
• The energy utilities’ main issue used to be the pay-back time - given up-front investments and fixed and variable cost; given the connection fee and the fixed and variable elements in the tariffs; given cross-subsidization between these types of cost and revenues; and given subsidies to stimulate the use of low carbon energy supply systems. As the former backbone of the Dutch fossil fuel saving policy, the public utilities had a double objective.

Since the mid-1990s, the Dutch government has stimulated the construction of sustainable energy supply systems through the state-funded participation of advisors early on in the decision-making process: the Optimal Energy Infrastructure-Programme (OEI). Taking account of the site-specific interests of the several parties, economically feasible energy savings and low carbon energy supply options could be applied on a larger scale than before.

By the mid-1990s, the Dutch Government initiated a process of liberalisation in the energy sector². A new Electricity Law was accepted in April 1999 and in June 2000 the new Gas Law was passed. Step-by-step, three pre-defined categories of end-users are given the right to ‘shop around’. Distribution networks have been opened up to third-party suppliers and the operation of these networks has been separated from the trade divisions.

Parallel to liberalization, a radical restructuring of the sector is taking place, involving horizontal integration, vertical (de-)integration, diversification and to a certain extent privatization. Most local utilities have merged into three large multi-utility firms and joint-ventures have been established with foreign companies to supply liberalized groups of consumers. The large production companies have been sold by provinces and municipalities to foreign firms. New participants are constructing independent electricity production capacity and/or import electricity.

The current industry structure, the existence of excess production capacity and the regulatory objectives pursued by the competition authority, DTe, are inducing a fairly competitive power market. The behaviour of the gas industry remains tied to its place within the oligopolistic European gas system. So, despite the fact that Dutch gas from the Groningen field is the lowest cost gas available in Europe, consumer prices will remain linked to those of oil products for the foreseeable future.

Meanwhile, the Dutch government maintains ambitious objectives regarding energy conservation and the use of renewable energy. Parallel to energy market liberalization, it is developing a sustainability policy ‘new-style’, which - instead of on the traditional self-regulation of target groups - is based largely on economic instruments, viz. subsidies and taxes. It has also reduced the role of the (former) energy utilities, for which energy saving can no longer be considered a ‘core-activity’.

As firms now consider each other as competitors, they reject sectoral convenants and refuse to share ‘strategic’ information about their customers and markets. In addition, the pressure upon firms to enhance profitability has reduced the staff and finance available, and traditional cross-subsidization between energy supply and network exploitation is now impossible. The utilities have been separated into energy supply companies and network operators with separate accounts and operations, which impedes the allocation of cost and revenue elements as a function of what is most ‘practical’ given the parties involved. Moreover, it is no longer self-evident that users buy their energy from the supplier that is associated with the firm that, at arms’ length, operates the network.

Differences between the regulation of power, gas and heat supply cause a structural variation in the risk incurred in the exploitation of these systems. Operators of electricity and gas networks are hardly confronted with any risk. Under a normal efficient operation, fixed and variable costs are recovered on the basis of the tariffs, which will be adjusted annually to increase efficiency but take into consideration actual levels of cost. Operators of other energy supply systems - like heat-distribution with CHP, heat pumps, etc. - run a much higher risk. There is no regulation that covers their operations. Profitability is a function of the developments of the price for gas (as input and alternative) and electricity (supplied to the grid), the impact of national energy saving strategies and the capital and operational costs. These systems are also highly exposed to regulatory risk, associated with the level at which the government fixes the so-called regulatory energy tax (REB) on energy produced non-fossil fuels and with the characteristics of subsidy-schemes.

Thus, the already small ‘margin for negotiation’ for sustainable energy infrastructures in new housing projects has been reduced further. The achievement of the CO₂-reduction objectives requires the development of new - more market-oriented - policies that stimulate the traditional actors in new ways to engage in innovative and effective initiatives. A central role herein could be played by the municipalities.

Currently, obligatory energy use standards are directed only at buildings. According to the Dutch Electricity and the Gas Law, supply options that apply to an area or neighbourhood are not allowed in principle, as they interfere with the separation of network and supply. Yet, the Dutch Government intends to support local sustainable supply systems. To this end, the Electricity and the Gas Law contain a provision that enables municipalities to select firms - other than the appointed regional network operator - in a competitive procedure, for the construction and exploitation of environmentally friendly supply systems, involving the operation of the local network as well as the supply function. Competition with other potential applicants may stimulate bidding firms to develop more innovative, (cost) effective and sustainable concepts, while safeguarding the required realism.

Yet, such an approach requires: firstly, that there is real competition among the participants, possibly through the invitation of new and/or foreign firms. A second requirement is that municipalities are able to create an effective selection procedure. There remains a need to support them in formulating sustainability objectives, in negotiating with energy companies and in establishing the criteria for evaluation. Finally, measures are to be taken to control the exploitation of the newly created sustainable systems - as these will become local monopolies. If and only if these requirements are met - which is not the case currently - then this experiment may produce an innovative ‘market-based’ instrument for energy policy, that will stimulate real dynamic efficiency.

These three papers raise questions about the constellation of institutional actors that need to be engaged in managing demand and developing more sustainable systems of provision. These questions demonstrate the value of analysing infrastructures and utility services as vertically integrated systems of provision. Such an approach has the further advantage of cutting across disciplinary boundaries. As this session shows, environmental sociology, urban planning and economics have much to contribute in tracking, anticipating and analysing recent and radical change in utility sectors. As it also makes clear, traditional conceptualisations of mono-dimensional providers and equally mono-dimensional consumers are increasingly redundant in this fast moving arena.

OECD: Urban Brownfields (www.oecd.org//tds/bis/brownfields-chap1.htm)

Fine, B. and Leopold, E. (1993) The World of Consumption, London: Routledge

Guy, Simon, Graham, Stephen and Marvin, Simon (1997) Splintering networks: cities and technical networks in 1990s Britain. Urban Studies, 34 (2), pp.191-216.

 

Guy, Simon; Marvin, Simon and Moss, Timothy (eds.) (2001): Urban Infrastructure in Transition. Networks, Buildings, Plans. London: Earthscan.

Guy, S. and Marvin, S.J (1996) Transforming Urban infrastructure provision - The emerging logic of demand side management, Policy Studies, Vol. 17, No.2 pp. 137-147

Nadel, S. and Geller, H. (1996), Utility DSM – What have we learned? Where are we going? Energy Policy, 24:4, pp.289-302