‘Did English Generators Play Cournot? Capacity Withholding in the Electricity Pool’
AbstractElectricity generators can raise the price of power by withholding their plant from the market. We discuss two ways in which this could have affected prices in the England and Wales Pool. Withholding low-cost capacity that should be generating will raise energy prices but make the pattern of generation less efficient. This pattern improved significantly after privatisation. Withholding capacity that was not expected to generate would raise the Capacity Payments based on spare capacity. On a multi-year basis, these did not usually exceed ‘competitive’ levels, the cost of keeping stations open. The evidence for large-scale capacity withholding is weak.
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Bibliographic InfoPaper provided by Faculty of Economics, University of Cambridge in its series Cambridge Working Papers in Economics with number 0425.
Date of creation: Feb 2004
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Electricity prices; Cournot competition; capacity withholding;
Other versions of this item:
- Richard Green, 2004. "Did English Generators Play Cournot? Capacity withholding in the Electricity Pool," Working Papers 0410, Massachusetts Institute of Technology, Center for Energy and Environmental Policy Research.
- L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-04-18 (All new papers)
- NEP-COM-2004-04-18 (Industrial Competition)
- NEP-ENE-2004-04-18 (Energy Economics)
- NEP-IND-2004-05-09 (Industrial Organization)
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