Vertical Integration and Market Power in Electricity Markets - read free eBook in online reader or directly download on the web page. Select files or add your book in reader. Download and read online ebook Vertical Integration and Market Power in Electricity Markets write by Seamus Hogan. This book was released on 2019. Vertical Integration and Market Power in Electricity Markets available in PDF, EPUB and Kindle. 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
Vertical Integration in Restructured Electricity Markets - read free eBook in online reader or directly download on the web page. Select files or add your book in reader. Download and read online ebook Vertical Integration in Restructured Electricity Markets write by Erin T. Mansur. This book was released on 2003. Vertical Integration in Restructured Electricity Markets available in PDF, EPUB and Kindle. 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.
Competition, Contracts and Electricity Markets
Competition, Contracts and Electricity Markets - read free eBook in online reader or directly download on the web page. Select files or add your book in reader. Download and read online ebook Competition, Contracts and Electricity Markets write by Jean-Michel Glachant. This book was released on 2011. Competition, Contracts and Electricity Markets available in PDF, EPUB and Kindle. 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
Vertical Integration and Capacity Competition in Electricity Markets - read free eBook in online reader or directly download on the web page. Select files or add your book in reader. Download and read online ebook Vertical Integration and Capacity Competition in Electricity Markets write by Rowan Walshaw. This book was released on 2008. Vertical Integration and Capacity Competition in Electricity Markets available in PDF, EPUB and Kindle. 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.
Competitive Electricity Markets
Competitive Electricity Markets - read free eBook in online reader or directly download on the web page. Select files or add your book in reader. Download and read online ebook Competitive Electricity Markets write by Fereidoon Sioshansi. This book was released on 2011-10-10. Competitive Electricity Markets available in PDF, EPUB and Kindle. 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
