EconPapers    
Economics at your fingertips  
 

A Quantitative Analysis of Pricing Behavior In California’s Wholesale Electricity Market During Summer 2000

Paul Joskow () and Edward Kahn

Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge

Abstract: During the Summer of 2000, wholesale electricity prices in California were nearly 500% higher than they were during the same months in 1998 or 1999. This price explosion was unexpected and has called into question whether electricity restructuring will bring the benefits of competition promised to consumers. The purpose of this paper is to examine the factors that explain this increase in wholesale electricity prices. We simulate competitive benchmark prices for Summer of 2000 taking account of all relevant supply and demand factors --- gas prices, demand, imports from other states, and emission permit prices. We then compare the simulated competitive benchmark prices with the actual prices observed. We find that there is a large gap between our benchmark competitive prices and observed prices, suggesting that the prices observed during summer 2000 reflect, in part, the exercise of market power by suppliers. We then proceed to examine supplier behavior during high-price hours. We find evidence that suppliers withheld supply from the market that would have been profitable for price-taking firms to sell at the market price.

Keywords: electricity; market power; deregulation (search for similar items in EconPapers)
JEL-codes: L13 L43 L94 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ene, nep-mic and nep-reg
Date: 2002-05
Note: CMI IO
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (97) Track citations by RSS feed

Downloads: (external link)
http://www.econ.cam.ac.uk/electricity/publications/wp/ep02.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found

Related works:
Journal Article: A Quantitative Analysis of Pricing Behavior in California's Wholesale Electricity Market During Summer 2000 (2002) Downloads
Working Paper: A Quantitative Analysis of Pricing Behavior in California's Wholesale Electricity Market During Summer 2000 (2001) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cam:camdae:0211

Access Statistics for this paper

More papers in Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge
Bibliographic data for series maintained by Jake Dyer (). This e-mail address is bad, please contact .

 
Page updated 2019-04-19
Handle: RePEc:cam:camdae:0211