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Why did British Electricity Prices Fall after 1998?

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  • Evans, J.
  • Green, R.

Abstract

In an attempt to reduce high electricity prices in England and Wales the government has reduced concentration among generators and introduced New Electricity Trading Arrangements (NETA). Econometric analysis on monthly data from April 1996 to September 2002 implies support for two conflicting hypotheses. On a static view, increases in competition and the capacity margin were chiefly responsible for the fall in prices. If generators had been tacitly colluding before NETA, however, the impending change in market rules might have changed their behaviour a few months before the abolition of the Pool. That view implies that NETA reduced prices.

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Bibliographic Info

Paper provided by Faculty of Economics, University of Cambridge in its series Cambridge Working Papers in Economics with number 0326.

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Length: 14
Date of creation: May 2003
Date of revision:
Handle: RePEc:cam:camdae:0326

Note: CMI26, IO
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Keywords: Electricity; market power; concentration; market rules;

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Cited by:
  1. Paul Twomey & Richard Green & Karsten Neuhoff & David Newbery, 2005. "A Review of the Monitoring of Market Power: The Possible Roles of TSOs in Monitoring for Market Power Issues in Congested Transmission Systems," Working Papers 0502, Massachusetts Institute of Technology, Center for Energy and Environmental Policy Research.
  2. Willems, Bert & Rumiantseva, Ina & Weigt, Hannes, 2009. "Cournot versus Supply Functions: What does the data tell us?," Energy Economics, Elsevier, vol. 31(1), pages 38-47, January.
  3. Giulietti, Monica & Grossi, Luigi & Waterson, Michael, 2009. "Price transmission in the UK electricity market : was NETA beneficial?," The Warwick Economics Research Paper Series (TWERPS) 913, University of Warwick, Department of Economics.
  4. Isabel Soares & Andres Faina & Jose Lopez & Laura Varela-Candamio, 2012. "What’s Happening to the European Electricity Market?," European Research Studies Journal, European Research Studies Journal, vol. 0(Special I), pages 145-156.
  5. Green, Richard & Vasilakos, Nicholas, 2010. "Market behaviour with large amounts of intermittent generation," Energy Policy, Elsevier, vol. 38(7), pages 3211-3220, July.
  6. Holmberg, Pär & Newbery, David, 2009. "The Supply Function Equilibrium and Its Policy Implications for Wholesale Electricity Auctions," Working Paper Series 812, Research Institute of Industrial Economics.
  7. Kalantzis, Fotis & Sakellaris, Kostis, 2012. "Investigating the Impact of the Greek Electricity Market Reforms on its Day-Ahead Market Prices," MPRA Paper 37794, University Library of Munich, Germany.
  8. Holmberg, P. & Lazarczyk, E., 2012. "Congestion management in electricity networks: Nodal, zonal and discriminatory pricing," Cambridge Working Papers in Economics 1219, Faculty of Economics, University of Cambridge.
  9. Green, Richard, 2001. "Failing Electricity Markets: Should we Shoot the Pools?," CEPR Discussion Papers 3010, C.E.P.R. Discussion Papers.
  10. Niamh McCarthy, 2005. "Market Size, Market Structure & Market Power in the Irish Electricity Industry," Papers WP168, Economic and Social Research Institute (ESRI).
  11. Hesamzadeh, Mohammad R. & Biggar, Darryl R. & Hosseinzadeh, Nasser, 2011. "The TC-PSI indicator for forecasting the potential for market power in wholesale electricity markets," Energy Policy, Elsevier, vol. 39(10), pages 5988-5998, October.
  12. Karakatsani, Nektaria V. & Bunn, Derek W., 2008. "Forecasting electricity prices: The impact of fundamentals and time-varying coefficients," International Journal of Forecasting, Elsevier, vol. 24(4), pages 764-785.
  13. Malaguzzi Valeri, Laura, 2006. "Comparison of Electricity Deregulation around the World and Implications for Ireland," Quarterly Economic Commentary: Special Articles, Economic and Social Research Institute (ESRI), vol. 2006(3-Autumn), pages 38-63.
  14. Heim, Sven & Götz, Georg, 2013. "Do pay-as-bid auctions favor collusion? Evidence from Germany's market for reserve power," ZEW Discussion Papers 13-035, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.

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