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Power marketer pricing behavior in the California Power Exchange

Tyler Hodge and Carol Dahl

Energy Economics, 2012, vol. 34, issue 2, 568-575

Abstract: Various studies have examined whether market power abuses by independent electricity generators contributed to the demise of the California Power Exchange (PX). However, the behavior of wholesale power marketers has generally been overlooked. To fill this gap, our paper focuses on the pricing behavior of five major power marketers in the California PX during 2000: Duke Energy Trading & Marketing, Reliant Energy Services, Dynegy Power Marketing, Enron Power Marketing, and Williams Energy Marketing & Trading. Our unique data set, collected by the Federal Energy Regulatory Commission during an investigation of energy market pricing manipulation, allows us to assess the level of market power using the conduct parameter pricing model. The estimated conduct parameter allows us to determine power marketer pricing behavior is competitive, Cournot, or collusive. Our results indicate that Duke Energy and Reliant were exercising market power when pricing the wholesale electricity they sold in the California PX during 2000. No statistical evidence was uncovered to show that the smaller marketers – Dynegy, Williams and, Enron – were setting prices at a level higher than those consistent with a competitive market.

Keywords: Power; Marketer; Pricing; Electricity; Wholesale (search for similar items in EconPapers)
JEL-codes: L19 L94 Q49 (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
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Energy Economics is currently edited by R. S. J. Tol, Beng Ang, Lance Bachmeier, Perry Sadorsky, Ugur Soytas and J. P. Weyant

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