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Transition to Centralized Unit Commitment: An Econometric Analysis of Colombia’s Experience

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  • Luciano de Castro
  • Shmuel Oren
  • Alvaro Riascos
  • Miguel Bernal

Abstract

This paper evaluates the impact of Resolution CREG 051 on the performance of the electricity markets in Colombia. We found out that productive efficiency has improved since the introduction of the Resolution, that is, the total costs of producing electricity have been reduced. This shows a positive impact of the Resolution. On the other hand, we also found that mark-ups and forward energy prices (from bilateral contracts) have increased since 2009, suggesting that there was an increase in the exercise of market power by producers. From the two previous points, we conclude that, although the productive efficiency has increased, the larger share of the efficiency gains were appropriated by the energy producers, rather than passed on to consumers.

Suggested Citation

  • Luciano de Castro & Shmuel Oren & Alvaro Riascos & Miguel Bernal, 2014. "Transition to Centralized Unit Commitment: An Econometric Analysis of Colombia’s Experience," Borradores de Economia 830, Banco de la Republica de Colombia.
    • Handle: RePEc:bdr:borrec:830
    DOI: 10.32468/be.830
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    1. Ramteen Sioshansi & Emma Nicholson, 2011. "Towards equilibrium offers in unit commitment auctions with nonconvex costs," Journal of Regulatory Economics, Springer, vol. 40(1), pages 41-61, August.
    2. Ruff, Larry E., 1994. "Stop wheeling and start dealing: Resolving the transmission dilemma," The Electricity Journal, Elsevier, vol. 7(5), pages 24-43, June.
    3. Erin T. Mansur, 2008. "Measuring Welfare in Restructured Electricity Markets," The Review of Economics and Statistics, MIT Press, vol. 90(2), pages 369-386, May.
    4. Sioshansi, Ramteen & Oren, Shmuel & O'Neill, Richard, 2010. "Three-part auctions versus self-commitment in day-ahead electricity markets," Utilities Policy, Elsevier, vol. 18(4), pages 165-173, December.
    5. Severin Borenstein & James B. Bushnell & Frank A. Wolak, 2002. "Measuring Market Inefficiencies in California's Restructured Wholesale Electricity Market," American Economic Review, American Economic Association, vol. 92(5), pages 1376-1405, December.
    6. Wedad Elmaghraby & Shmuel S. Oren, 1999. "The Efficiency of Multi-Unit Electricity Auctions," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4), pages 89-116.
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    Citations

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    Cited by:

    1. Jesús M. López-Lezama & David Tobón-Orozco & Esteban Velilla & Jorge Barrientos & Fernando Villada, 2018. "Long-term seasonal forwards in electricity generation markets: an application to Colombia," Revista Cuadernos de Economia, Universidad Nacional de Colombia, FCE, CID, vol. 37(74), pages 287-314, July.
    2. Jorge Balat & Juan E. Carranza & Juan D. Martin, 2015. "Dynamic and Strategic Behavior in Hydropower-Dominated Electricity Markets: Empirical Evidence for Colombia," Borradores de Economia 886, Banco de la Republica de Colombia.
    3. Gallego, Camilo A., 2022. "Intertemporal effects of imperfect competition through forward contracts in wholesale electricity markets," Energy Economics, Elsevier, vol. 107(C).
    4. Jorge Barrientos Mar n & Fernando Villada, 2020. "Regionalized Discount Rate to Evaluate Renewable Energy Projects in Colombia," International Journal of Energy Economics and Policy, Econjournals, vol. 10(2), pages 332-336.
    5. Karimi, Ali & Tarashandeh, Nader & Kouchakzadeh, Amirmasoud & Kouchakmohseni, Farshad & Naghiloo, Mitra, 2022. "Iran's day-ahead electricity market: Structural assessment and solutions," Utilities Policy, Elsevier, vol. 75(C).
    6. John J. García Rendón & Alex F. Pérez-Libreros, 2019. "El precio spot de la electricidad y la inclusión de energía renovable no convencional: evidencia para Colombia," Documentos de Trabajo CIEF 17393, Universidad EAFIT.
    7. Suarez, Carlos, 2022. "Private management and strategic bidding behavior in electricity markets: Evidence from Colombia," Energy Economics, Elsevier, vol. 111(C).
    8. Camelo, Sergio & Papavasiliou, Anthony & de Castro, Luciano & Riascos, Álvaro & Oren, Shmuel, 2018. "A structural model to evaluate the transition from self-commitment to centralized unit commitment," Energy Economics, Elsevier, vol. 75(C), pages 560-572.
    9. Jorge Balat & Juan Esteban Carranza & Juan David Martin & Alvaro Riascos, 2022. "The effects of changes in the regulation of the Colombian wholesale electricity market in a structural model of complex auctions," Borradores de Economia 1211, Banco de la Republica de Colombia.
    10. Alvaro J. Riascos Villegas & Julian Chitiva & Carlos Salazar, 2022. "Detección de Anomalías y Poder de Mercado en el Sector Eléctrico Colombiano," Borradores de Economia 1217, Banco de la Republica de Colombia.
    11. David Rios & Alex Perez & Jaime Carabali & Luis Meneses, 2024. "Poder de mercado y eventos climáticos adversos en un mercado de electricidad hidro-dominado," Borradores de Economia 1266, Banco de la Republica de Colombia.
    12. Perez, Alex & Garcia-Rendon, John J., 2021. "Integration of non-conventional renewable energy and spot price of electricity: A counterfactual analysis for Colombia," Renewable Energy, Elsevier, vol. 167(C), pages 146-161.

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    More about this item

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices

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