Methods of Evaluation of the Market Power Level on the Wholesale Electricity Market

2018 ◽  
pp. 11-18
Author(s):  
A. Trachuk ◽  
D. G. Sandler
Keyword(s):  
Market Power ◽  
Electricity Market ◽  
Power Level ◽  
Methods Of Evaluation ◽  
Wholesale Electricity Market

scholarly journals The Trouble With Electricity Markets: Understanding California's Restructuring Disaster

2002 ◽  
Vol 16 (1) ◽  
pp. 191-211 ◽  
Author(s):  
Severin Borenstein
Keyword(s):  
Market Power ◽  
Electricity Markets ◽  
Electricity Market ◽  
Production Constraints ◽  
Support Price ◽  
Wholesale Electricity Market ◽  
Price Responsiveness

In June 2000, after two years of fairly smooth operation, California's deregulated wholesale electricity market began producing extremely high prices and threats of supply shortages. The upheaval demonstrated dramatically why most current electricity markets are extremely volatile: demand is difficult to forecast and exhibits virtually no price responsiveness, while supply faces strict production constraints and prohibitive storage costs. This structure leads to periods of surplus and of shortage, the latter exacerbated by sellers' ability to exercise market power. Electricity markets can function much more smoothly, however, if they are designed to support price-responsive demand and long-term wholesale contracts for electricity.

scholarly journals Measuring Market Inefficiencies in California's Restructured Wholesale Electricity Market

2002 ◽  
Vol 92 (5) ◽  
pp. 1376-1405 ◽  
Author(s):  
Severin Borenstein ◽  
James B Bushnell ◽  
Frank A Wolak
Keyword(s):  
Market Power ◽  
Electricity Market ◽  
Production Costs ◽  
High Demand ◽  
Market Inefficiencies ◽  
Wholesale Electricity Market ◽  
Using Data ◽  
Competitive Pricing

We present a method for decomposing wholesale electricity payments into production costs, inframarginal competitive rents, and payments resulting from the exercise of market power. Using data from June 1998 to October 2000 in California, we find significant departures from competitive pricing during the high-demand summer months and near-competitive pricing during the lower-demand months of the first two years. In summer 2000, wholesale electricity expenditures were $8.98 billion up from $2.04 billion in summer 1999. We find that 21 percent of this increase was due to production costs, 20 percent to competitive rents, and 59 percent to market power.

Sign in / Sign up

Export Citation Format

Share Document