Vertical Integration And Market Power In Electricity Markets

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Vertical Integration and Market Power in Electricity Markets

Author : Seamus Hogan
Publisher :
ISBN 13 :
Total Pages : 15 pages
Book Rating : 4.:/5 (13 download)

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Book Synopsis Vertical Integration and Market Power in Electricity Markets by : Seamus Hogan

Download or read book Vertical Integration and Market Power in Electricity Markets written by Seamus Hogan and published by . This book was released on 2019 with total page 15 pages. Available in PDF, EPUB and Kindle. Book excerpt: Vertical separation of generation from electricity retailing has often been required as a condition of electricity market liberalisation. A well-developed and liquid contracts market is similarly suggested as necessary to manage the resulting wholesale market risks, which risks are further exacerbated by competition. Such contracts markets are rare, however, and increasingly evidence is emerging that vertical integration is associated not just with improved wholesale market risk management, but also reduced wholesale market power. This paper develops a theoretical model showing that non-vertically integrated generators will over-report their inverse supply curves, with the incentive to over-report increasing with the firm's share of generating capacity. Conversely, in a vertically integrated industry, no over-reporting occurs when integrated firms have balanced shares in wholesale and retail markets. In general, firms whose share of generating capacity is higher (lower) than their retail market share will over-report (under-report) their inverse supply functions. Integration is found to affect retail electricity prices only via its effect on retail marginal costs. We find that retail prices are higher with vertical separation than with either balanced integration, or full integration without a wholesale market. These results suggest a re-evaluation of the importance of generator wholesale market power in vertically integrated electricity industries, and of measures to improve retail market competitiveness under either vertical integration or separation.

Vertical Integration in Restructured Electricity Markets

Author : Erin T. Mansur
Publisher :
ISBN 13 :
Total Pages : 0 pages
Book Rating : 4.:/5 (137 download)

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Book Synopsis Vertical Integration in Restructured Electricity Markets by : Erin T. Mansur

Download or read book Vertical Integration in Restructured Electricity Markets written by Erin T. Mansur and published by . This book was released on 2003 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Unlike other studies that have found substantial inefficiencies in restructured electricity markets, this paper provides estimates that reveal relatively competitive behavior in the Pennsylvania, New Jersey, and Maryland market. This distinctive conclusion results from using a model that incorporates structural market features and particular production constraints that are not captured in previous studies. First, the vertical integration of firms in the PJM market reduces electricity producers' interest in setting high prices; producers sell wholesale electricity and also are required to buy power, which they provide to their retail customers at set rates. My model reflects this degree of vertical integration of PJM firms. Second, I account for production constraints that result in cost nonconvexities. Measures of price-cost margins based on a commonly used method that does not incorporate these nonconvexities imply that market imperfections during the summer following PJM's restructuring increased procurement costs 51% ($950 million). That method further implies considerable welfare loss as actual production costs exceeded the competitive model's estimates by 12.5%. This paper develops a consistent estimate of competitive production decisions that respect important production constraints, and it presents estimates showing that costs were only 3.4% above competitive levels. Using this new method of estimating production, I compare behavior of two producers that have relatively few retail customers with other firms. Consistent with these vertically integrated firms' incentives, only firms with large net selling positions in the market reduced output relative to competitive production estimates.

Competitive Electricity Markets

Author : Fereidoon Sioshansi
Publisher : Elsevier
ISBN 13 : 0080557716
Total Pages : 625 pages
Book Rating : 4.0/5 (85 download)

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Book Synopsis Competitive Electricity Markets by : Fereidoon Sioshansi

Download or read book Competitive Electricity Markets written by Fereidoon Sioshansi and published by Elsevier. This book was released on 2011-10-10 with total page 625 pages. Available in PDF, EPUB and Kindle. Book excerpt: After 2 decades, policymakers and regulators agree that electricity market reform, liberalization and privatization remains partly art. Moreover, the international experience suggests that in nearly all cases, initial market reform leads to unintended consequences or introduces new risks, which must be addressed in subsequent “reform of the reforms. Competitive Electricity Markets describes the evolution of the market reform process including a number of challenging issues such as infrastructure investment, resource adequacy, capacity and demand participation, market power, distributed generation, renewable energy and global climate change. Sequel to Electricity Market Reform: An International Perspective in the same series published in 2006 Contributions from renowned scholars and practitioners on significant electricity market design and implementation issues Covers timely topics on the evolution of electricity market liberalization worldwide

Competition, Contracts and Electricity Markets

Author : Jean-Michel Glachant
Publisher : Edward Elgar Publishing
ISBN 13 : 184980480X
Total Pages : 335 pages
Book Rating : 4.8/5 (498 download)

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Book Synopsis Competition, Contracts and Electricity Markets by : Jean-Michel Glachant

Download or read book Competition, Contracts and Electricity Markets written by Jean-Michel Glachant and published by Edward Elgar Publishing. This book was released on 2011 with total page 335 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book fills a gap in the existing literature by dealing with several issues linked to long-term contracts and the efficiency of electricity markets. These include the impact of long-term contracts and vertical integration on effective competition, generation investment in risky markets, and the challenges for competition policy principles. On the one hand, long-term contracts may contribute to lasting generation capability by allowing for a more efficient allocation of risk. On the other hand, they can create conditions for imperfect competition and thus impair short-term efficiency. The contributors – prominent academics and policy experts with inter-disciplinary perspectives – develop fresh theoretical and practical insights on this important concern for current electricity markets. This highly accessible book will strongly appeal to both academic and professional audiences including scholars of industrial, organizational and public sector economics, and competition and antitrust law. It will also be of value to regulatory and antitrust authorities, governmental policymakers, and consultants in electricity law and economics.

Vertical Integration and Capacity Competition in Electricity Markets

Author : Rowan Walshaw
Publisher :
ISBN 13 :
Total Pages : 0 pages
Book Rating : 4.:/5 (137 download)

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Book Synopsis Vertical Integration and Capacity Competition in Electricity Markets by : Rowan Walshaw

Download or read book Vertical Integration and Capacity Competition in Electricity Markets written by Rowan Walshaw and published by . This book was released on 2008 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper characterises the impact of vertical integration on price equilibria and incentives to strategically withhold capacity in a wholesale electricity auction. A two-stage game is analysed where vertically integrated firms first declare the quantity of electricity available and then compete in a uniform price auction. Consistent with empirical literature on electricity markets, the model finds that firms' incentives are determined by their net demand position in the market. Results indicate that for the majority of parameter values, a vertically integrated structure yields a greater occurrence of competitive pricing in the wholesale market. Contrary to recent analysis of non-integration, vertical integration eliminates incentives for strategic capacity withholding.

From Regulation to Competition: New frontiers in electricity markets

Author : Michael A. Einhorn
Publisher : Springer Science & Business Media
ISBN 13 : 9401113688
Total Pages : 286 pages
Book Rating : 4.4/5 (11 download)

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Book Synopsis From Regulation to Competition: New frontiers in electricity markets by : Michael A. Einhorn

Download or read book From Regulation to Competition: New frontiers in electricity markets written by Michael A. Einhorn and published by Springer Science & Business Media. This book was released on 2012-12-06 with total page 286 pages. Available in PDF, EPUB and Kindle. Book excerpt: Electric utilities throughout the world continue to face new challenges involving ownership, market structure, and regulation. There are three related issues at hand. First, should ownership be private or public? Second, what operations should be integrated and where is competition feasible? Third, where is regulation necessary and can it be made more efficient? This volume bears directly upon these concerns. The book contains two sections. The first six articles discuss the British electricity experiment that has privatized and disintegrated the nation's generation, transmission, and distribution companies, introduced market competition for power purchases, and implemented incentive regulation for monopolized transmission and distribution grids. The remaining articles focus on the theater in which significant microeconomic issues will continue to emerge, most immediately in the U.K. and U.S.A. -- the coordination and pricing of transmission.

Power Structure

Author : John E. Kwoka Jr.
Publisher : Springer Science & Business Media
ISBN 13 : 0585229651
Total Pages : 200 pages
Book Rating : 4.5/5 (852 download)

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Book Synopsis Power Structure by : John E. Kwoka Jr.

Download or read book Power Structure written by John E. Kwoka Jr. and published by Springer Science & Business Media. This book was released on 2007-08-28 with total page 200 pages. Available in PDF, EPUB and Kindle. Book excerpt: Power Structure examines the effects on economic performance of several key features of the U.S. electric power industry. Paramount among these are public versus private ownership, vertical integration versus deintegration, and retail competition versus monopoly distribution. Each of these, as well as other structural characteristics of utilities and their markets, are analyzed for their effects on costs and price. These issues are important for a number of reasons. The U.S. electric power industry is presently embarking on a fundamental restructuring in terms of integration and competition. In other countries, privatization of state-owned enterprises is being viewed as the answer to unsatisfactory performance. From a longer perspective, the question of the relative performance of publicly owned versus privately owned utilities in the U.S. has never been resolved. And despite much speculation there is little reliable evidence as to the importance of either vertical integration or competition.

Evolution of Global Electricity Markets

Author : Fereidoon Sioshansi
Publisher : Academic Press
ISBN 13 : 0123979064
Total Pages : 867 pages
Book Rating : 4.1/5 (239 download)

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Book Synopsis Evolution of Global Electricity Markets by : Fereidoon Sioshansi

Download or read book Evolution of Global Electricity Markets written by Fereidoon Sioshansi and published by Academic Press. This book was released on 2013-06-10 with total page 867 pages. Available in PDF, EPUB and Kindle. Book excerpt: Get the latest on rapidly evolving global electricity markets direct from the scholars andthought leaders who are shaping reform. In this volume, dozens of world-class expertsfrom diverse regions provide a comprehensive assessment of the relevant issues intoday’s electricity markets. Amid a seething backdrop of rising energy prices, concerns about environmentaldegradation, and the introduction of distributed sources and smart grids, increasinglystringent demands are being placed on the electric power sector to provide a morereliable, efficient delivery infrastructure, and more rational, cost-reflective prices. Thisbook maps out the electric industry’s new paradigms, challenges and approaches,providing invaluable global perspective on this host of new and pressing issues beinginvestigated by research institutions worldwide. Companies engaged in the powersector’s extensive value chain including utilities, generation, transmission & distributioncompanies, retailers, suppliers, regulators, market designers, and the investment &financial rating community will benefit from gaining a more nuanced understanding ofthe impacts of key market design and restructuring choices. How can problems beavoided? Why do some restructured markets appear to function better than others?Which technological implementations represent the best investments? Whichregulatory mechanisms will best support these new technologies? What lessons canbe learned from experiences in Norway, Australia, Texas, or the U.K.? Thesequestions and many more are undertaken by the brightest minds in the industry in thisone comprehensive, cutting-edge resource. Features a unique global perspective from more than 40 recognized experts and scholars around the world, offering opportunities to compare and contrast a wide range of market structures Analyzes how the implementation of existing and developing market designs impacts real-world issues such as pricing and reliability Explains the latest thinking on timely issues such as current market reform proposals, restructuring, liberalization, privatization, capacity and energy markets, distributed and renewable energy integration, competitive generation and retail markets, and disaggregated vs. vertically integrated systems

Vertical Integration and the Restructuring of the U.S. Electricity Industry

Author : Robert J. Michaels
Publisher :
ISBN 13 :
Total Pages : 0 pages
Book Rating : 4.:/5 (137 download)

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Book Synopsis Vertical Integration and the Restructuring of the U.S. Electricity Industry by : Robert J. Michaels

Download or read book Vertical Integration and the Restructuring of the U.S. Electricity Industry written by Robert J. Michaels and published by . This book was released on 2004 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Debates on restructuring of the U.S. electricity industry are often about the degree to which market relationships should replace transactions that formerly took place within regulated, vertically integrated utilities. Markets for the purchase of energy by vertically unintegrated distribution utilities are clearly feasible, but vertical deintegration of existing systems may entail foregoing some operational and reliability benefits that are important in light of electricity's unique characteristics. Research and policy on restructuring have almost totally disregarded a large econometric literature on the savings from vertical integration. At the same time, policy makers have accepted the results of flawed studies that purport to estimate the benefits of switching to a market regime. A review of California's restructuring history shows that vertical integration was viewed primarily as a tool that incumbent utilities might use to perpetuate their market power. The disregard of its benefits led to questionable divestitures that produced superficially competitive market structures, and to the institution of Independent System Operators whose costs have yet to be compared to their benefits.

Designing Competitive Electricity Markets

Author : Hung-po Chao
Publisher : Springer Science & Business Media
ISBN 13 : 1461555477
Total Pages : 213 pages
Book Rating : 4.4/5 (615 download)

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Book Synopsis Designing Competitive Electricity Markets by : Hung-po Chao

Download or read book Designing Competitive Electricity Markets written by Hung-po Chao and published by Springer Science & Business Media. This book was released on 2013-12-01 with total page 213 pages. Available in PDF, EPUB and Kindle. Book excerpt: The authors are prominent economists, operation researchers, and engineers who have been instrumental in the development of the conceptual framework for electric power restructuring both in the United States and in other countries. Rather than espousing a particular market design for the industry's future, each author focuses on an important issue or set of issues and tries to frame the questions for designing electricity markets using an international perspective. The book focuses on the economic and technical questions important in understanding the industry's long-term development rather than providing immediate answers for the current political debates on industry competition.

Competitive Electricity Markets: The Power of Choice

Author : Joseph L. Welch, PE
Publisher : Lulu.com
ISBN 13 : 0557160170
Total Pages : 224 pages
Book Rating : 4.5/5 (571 download)

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Book Synopsis Competitive Electricity Markets: The Power of Choice by : Joseph L. Welch, PE

Download or read book Competitive Electricity Markets: The Power of Choice written by Joseph L. Welch, PE and published by Lulu.com. This book was released on 2009 with total page 224 pages. Available in PDF, EPUB and Kindle. Book excerpt: Critique of the US Electricity Industry. Analysis of derailed industry deregulation initiatives. Sketches a new, competitively structured Energy Policy Template.

Electricity Market Reform

Author : Fereidoon Sioshansi
Publisher : Elsevier
ISBN 13 : 0080462715
Total Pages : 687 pages
Book Rating : 4.0/5 (84 download)

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Book Synopsis Electricity Market Reform by : Fereidoon Sioshansi

Download or read book Electricity Market Reform written by Fereidoon Sioshansi and published by Elsevier. This book was released on 2006-04-13 with total page 687 pages. Available in PDF, EPUB and Kindle. Book excerpt: Since the late 1980s, policy makers and regulators in a number of countries have liberalized, restructured or “deregulated their electric power sector, typically by introducing competition at the generation and retail level. These experiments have resulted in vastly different outcomes - some highly encouraging, others utterly disastrous. However, many countries continue along the same path for a variety of reasons. Electricity Market Reform examines the most important competitive electricity markets around the world and provides definitive answers as to why some markets have performed admirably, while others have utterly failed, often with dire financial and cost consequences. The lessons contained within are direct relevance to regulators, policy makers, the investment community, industry, academics and graduate students of electricity markets worldwide. Covers electicity market liberalization and deregulation on a worldwide scale Features expert contributions from key people within the electricity sector

Bilateral Market Power and Vertical Integration in the Spanish Electricity Spot Market

Author : Kai-Uwe Kühn
Publisher :
ISBN 13 :
Total Pages : 60 pages
Book Rating : 4.:/5 (249 download)

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Book Synopsis Bilateral Market Power and Vertical Integration in the Spanish Electricity Spot Market by : Kai-Uwe Kühn

Download or read book Bilateral Market Power and Vertical Integration in the Spanish Electricity Spot Market written by Kai-Uwe Kühn and published by . This book was released on 2004 with total page 60 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Market Building through Antitrust

Author : Adrien de Hauteclocque
Publisher : Edward Elgar Publishing
ISBN 13 : 085793774X
Total Pages : 225 pages
Book Rating : 4.8/5 (579 download)

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Book Synopsis Market Building through Antitrust by : Adrien de Hauteclocque

Download or read book Market Building through Antitrust written by Adrien de Hauteclocque and published by Edward Elgar Publishing. This book was released on 2013-12-27 with total page 225 pages. Available in PDF, EPUB and Kindle. Book excerpt: By mixing legal, political and economic perspectives, this book will appeal to a wide range of readers from academia in law, economics and political science, regulatory and competition authorities, as well as legal and consulting practices and business

Market Power in Power Markets in Europe

Author : Thao Pham
Publisher :
ISBN 13 :
Total Pages : 267 pages
Book Rating : 4.:/5 (928 download)

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Book Synopsis Market Power in Power Markets in Europe by : Thao Pham

Download or read book Market Power in Power Markets in Europe written by Thao Pham and published by . This book was released on 2015 with total page 267 pages. Available in PDF, EPUB and Kindle. Book excerpt: The two last centuries have witnessed an exceptional revolution in the organization of electric power markets worldwide. The industry's organization has changed from vertically integrated monopolies under regulation to unbundled structures that favor market mechanisms; known as reform process in Europe. The shift to reliance on market prices, given concentrated structures and particular characteristics of electricity industry, raises a possibility that some firms could influence the market prices by exercising their market power. The issues of "market power" in a given industry have been abundantly employed in the literatureof Industrial Organization since the late 1970s but theoretical and empirical studies of "market power in electricity markets" have only been developed recently. In this thesis, we attempt to carry out an insight research around market power questions in deregulated wholesale electricity markets in Europe, as regarding the way of defining and measuring it. We carry out empirical studies in two of the biggest liberalized electricity markets in Europe: France (2009-2012's data) and Germany (2011's data), using econometric regressions and electricity simulation models as main methodologies. The subject is particularly relevant inthe context of energy transition in Europe (transition energetique in France and Energiewende in Germany).

Competitive Electricity Markets and Sustainability

Author : François Lévêque
Publisher : Edward Elgar Publishing
ISBN 13 : 184720435X
Total Pages : 319 pages
Book Rating : 4.8/5 (472 download)

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Book Synopsis Competitive Electricity Markets and Sustainability by : François Lévêque

Download or read book Competitive Electricity Markets and Sustainability written by François Lévêque and published by Edward Elgar Publishing. This book was released on 2007-01-01 with total page 319 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book responds to the opening up of electricity markets to competition, which has completely changed the nature of power generation. The building of new generation and transmission capacity and the setting of the energy mix between nuclear, gas and renewable resources are mainly left to private initiative and investors. The authors and the editor of this book explore whether or not market forces offer a sustainable future for electricity generation. They employ economic theory and method to answer questions such as: Will the market be able to ensure adequacy of generation capacity and secu.

Vertical Arrangements, Market Structure, and Competition

Author : James Bushnell
Publisher :
ISBN 13 :
Total Pages : 0 pages
Book Rating : 4.:/5 (137 download)

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Book Synopsis Vertical Arrangements, Market Structure, and Competition by : James Bushnell

Download or read book Vertical Arrangements, Market Structure, and Competition written by James Bushnell and published by . This book was released on 2005 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines the relative importance of horizontal market structure, auction design, and vertical arrangements in explaining electricity prices. We define vertical arrangements as either vertical integration or long term contracts whereby retail prices are determined prior to wholesale prices. This is generally the case in electricity markets. These ex ante retail price commitments mean that a producer has effectively entered into a forward contract when it takes on retail customers. The integrated firm has less incentive to raise wholesale prices when its sale price is constrained. For three restructured wholesale electricity markets, we simulate two sets of prices that define the bounds on static oligopoly equilibria. Our findings suggest that vertical arrangements dramatically affect estimated market outcomes. Simulated prices that assume Cournot behavior but ignore this vertical scope vastly exceed observed prices. After accounting for the arrangements, performance is similar to Cournot in each market. Our results indicate that auction design has done little to limit strategic behavior and that horizontal market structure accurately predicts market performance only when vertical structure is also taken into account.