Anti-monopoly policy in electricity: Efficiency of capacity price auction and legitimate conduct of suppliers

M. Vasilyev
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M. Vasilyev: Melentiev Energy Systems Institute, Siberian Branch of the Russian Academy of Sciences, Irkutsk, Russia

Journal of the New Economic Association, 2019, vol. 44, issue 4, 190-207

Abstract: There are requirements in Russian law to the behavior of suppliers. If some actions do not meet the requirements, the anti-monopoly authority will punish the supplier. There are different viewpoints on what behavior should be considered as well-founded. The paper considers approaches that aim to assess the behavior of power supplier from the viewpoint of a perfect competition market participant and from the viewpoint of cost recovery. The study indicates that different approaches to assess the behavior of capacity suppliers provide different results and supply curves. Capacity market in Russia requires bidding separately for each generating unit and it corresponds neither with the perfect competition model nor with dispositions of the Federal law "On competition protection", if the supplier operates more than one generating unit. Current requirements to conduct of capacity suppliers pose risk on them and do not correspond with efficient market from the viewpoint of industrial organization theory. It is suggested to change the bidding rules and conduct criteria - instead of unit-based bidding apply bidding by power plants and do not apply the criterion "monopolistically low price" to capacity supplier bids.

Keywords: electric power industry; capacity price auction; anti-monopoly policy; market manipulation; well-founded bidding (search for similar items in EconPapers)
JEL-codes: D43 L13 L51 L94 (search for similar items in EconPapers)
Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:nea:journl:y:2019:i:44:p:190-207

DOI: 10.31737/2221-2264-2019-44-4-7

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