Electricity market integration: Redistribution effect versus resource reallocation

D. Finon and E. Romano
Additional contact information
D. Finon: Gis LARSEN (Laboratoire d'Analyse economique des Reseaux et des Systemes Energetiques), France - affiliation inconnue, CIRED - centre international de recherche sur l'environnement et le développement - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - EHESS - École des hautes études en sciences sociales - AgroParisTech - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique
E. Romano: Commission de Regulation de l'Energie, France - affiliation inconnue

Post-Print from HAL

Abstract: In countries with a significant amount of low variable cost generation capacity, the integration of electricity markets poses a real problem with respect to consumers' interests. In such cases, consumers face a significant price rise compared with consumers in countries where low-cost capacities are lacking. This paper analyses this problem both in the short and long term, focusing on a market dominated by nuclear and hydro production. When there are too many restrictions on new capacity developments in low-cost technologies, market integration will lead to surplus redistribution without any production reallocation. This really makes it legitimate to contemplate redistributive compensations towards local consumers in countries which benefited from low variable cost generators at the moment of liberalisation. This paper examines two alternative ways of rent reallocation, one by income with a windfall tax on nuclear producers and the allocation of this revenue to energy efficiency policy funds, and another by price by giving drawing rights on the existing nuclear generators' production to small commercial and domestic consumers, at a level equivalent to the one necessary to maintain regulated prices. © 2009 Elsevier Ltd. All rights reserved.

Date: 2009
References: Add references at CitEc
Citations: View citations in EconPapers (11)

Published in Energy Policy, 2009, 37 (8), pp.2977. ⟨10.1016/j.enpol.2009.03.045⟩

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
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:hal:journl:hal-00716343

DOI: 10.1016/j.enpol.2009.03.045

Access Statistics for this paper

More papers in Post-Print from HAL
Bibliographic data for series maintained by CCSD ().