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Why (and how) to regulate power exchanges in the EU market integration context?

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  • Meeus, Leonardo

Abstract

The European Union (EU) market integration is leading to increasingly monopolistic electricity market infrastructures, which has opened a debate on the regulation of these so-called power exchanges. In this paper, we start by stating that there are two types of power exchanges in Europe, i.e. "merchant" and "cost-of-service regulated" power exchanges. We then discuss how regulation can be used to better align their incentives with the main power exchange tasks. We conclude that adopting the cost-of-service regulated model for all power exchanges in Europe could be counterproductive in the current context, but that regulation can help ensure that the benefits of the EU market integration materialize. Promising regulatory actions include tempering the reinforced market power of power exchanges, and quality-of-service regulation for the ongoing cooperation among power exchanges to organize trade across borders.

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Bibliographic Info

Article provided by Elsevier in its journal Energy Policy.

Volume (Year): 39 (2011)
Issue (Month): 3 (March)
Pages: 1470-1475

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Handle: RePEc:eee:enepol:v:39:y:2011:i:3:p:1470-1475

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Web page: http://www.elsevier.com/locate/enpol

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Keywords: Electricity market Regulation Congestion management;

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References

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Citations

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Cited by:
  1. Marcelo Saguan & Leonardo Meeus, 2011. "Modeling the Cost of Achieving a Renewable Energy Target: Does it Pay to Cooperate Across Borders?," RSCAS Working Papers 2011/46, European University Institute.
  2. Ivan Diaz-Rainey & Mathias Siems & John K. Ashton, 2011. "The financial regulation of energy and environmental markets," Journal of Financial Regulation and Compliance, Emerald Group Publishing, vol. 19(4), pages 355-369, November.
  3. Füss, Roland & Mahringer, Steffen & Prokopczuk, Marcel, 2013. "Electricity Spot and Derivatives Pricing when Markets are Interconnected," Working Papers on Finance 1323, University of St. Gallen, School of Finance.

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