The Electricity Contract Market
AbstractIn England and Wales, wholesale electricity is sold in a spot market partly covered by long-term contracts which hedge the spot price. Two dominant conventional generators can raise spot prices to undesirable levels, which is profitable in the absence of contracts. If fully hedged, however, the generators lose their incentive to raise prices above marginal costs. Competition in the contract market could lead the generators to sell contracts for much of their output. Since privatisation, the generators have indeed covered most of their sales in the contract market.
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Bibliographic InfoPaper provided by Faculty of Economics, University of Cambridge in its series Cambridge Working Papers in Economics with number 9616.
Length: 22 pages
Date of creation: 1996
Date of revision:
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Web page: http://www.econ.cam.ac.uk/index.htm
OLIGOPOLIES; ELECTRICITY; CONTRACTS;
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