The NOME law: implications for the French electricity market

Anna Créti, Jerome Pouyet and María Eugenia Sanin Vázquez
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Anna Créti: X-DEP-ECO - Département d'Économie de l'École Polytechnique - X - École polytechnique - IP Paris - Institut Polytechnique de Paris, EconomiX - EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique

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Abstract: In December 2010, France approved the law "Nouvelle Organisation du Marché de l'Electricité" (or NOME law) to promote competition in the retail electricity market. In practice, the law allows retailers to buy nuclear production from the incumbent, at a regulated access price. This mechanism works up to a ceiling of 100 terawatt hours, which represents one quarter of the incumbent's production from nuclear plants. Each retailer is assigned a share of that amount proportionally to its portfolio of clients. We contribute to the debate raised by the NOME law regarding the evolution of retail market prices. We show that a price decrease results if the ceiling is sufficiently high compared to the market share of the retailers competing with the incumbent. This pro-competitive effect is stronger when the incumbent's rivals take into account the impact of their market strategy on the redistribution rule. Finally, we find that, if the regulated price of the NOME electricity is set above the nuclear cost, the incumbent realizes a gain that may result in strategic withholding, weakening the pro-competitive effects of the law.

Keywords: Electricity markets; Retail competition; NOME law (search for similar items in EconPapers)
Date: 2013-04
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Citations: View citations in EconPapers (4)

Published in Journal of Regulatory Economics, 2013, 43 (2), pp.196-213. ⟨10.1007/s11149-012-9206-3⟩

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Journal Article: The NOME law: implications for the French electricity market (2013)
Working Paper: The NOME law: implications for the French electricity market (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:pseptp:hal-00813240

DOI: 10.1007/s11149-012-9206-3

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