The prerequisites for effective competition in restructured wholesale electricity markets

R. Haas and H. Auer

Energy, 2006, vol. 31, issue 6, 857-864

Abstract: This paper argues that effective competition in reformed wholesale electricity markets can only be achieved if the following six prerequisites are met: (1) separation of the grid from generation and supply; (2) wholesale price deregulation; (3) sufficient transmission capacity for a competitive market and non-discriminating grid access; (4) excess generation capacity developed by a large number of competing generators; (5) an equilibrium relationship between short-term spot markets and the long-term financial instruments that marketers use to manage spot-market price volatility; (6) an essentially hands-off government policy that encompasses reduced oversight and privatization. The absence of any one of the first five conditions may result in an oligopoly or monopoly market whose economic performance does not meet the efficiency standards of a competently managed regulated electrical utility.

Keywords: Electricity market; Wholesale price; Transmission capacity (search for similar items in EconPapers)
Date: 2006
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:energy:v:31:y:2006:i:6:p:857-864

DOI: 10.1016/j.energy.2005.03.008

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