A Quantitative Analysis of Pricing Behavior in California's Wholesale Electricity Market During Summer 2000
AbstractWe simulate competitive benchmark wholesale prices for electricity in California during the summer of 2000, taking account of changes in gas prices, demand, and imports during this time period. We also examine the impact of changes in the prices of NOx emissions permits on the competitive benchmark prices for electricity. The competitive benchmark prices are compared to actual prices. A significant fraction of the changes in wholesale electricity prices in California during Summer 2000 can be explained by these four factors. The impact of higher NOx permit prices, and their interaction with reduced imports into California, have a particularly large impact on competitive benchmark prices. However, during June, July and August a large unexplained difference between actual prices and competitive benchmark prices remains. We attribute this difference to supplier market power and related market imperfections. We then examine whether there is evidence of strategic behavior by suppliers during the highest priced hours during the summer. Evidence of supply withholding during these hours is identified.
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Bibliographic InfoPaper provided by Regulation2point0 in its series Working paper with number 506.
Date of creation: Jan 2001
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Other versions of this item:
- Paul L. Joskow & Edward Kohn, 2002. "A Quantitative Analysis of Pricing Behavior in California's Wholesale Electricity Market During Summer 2000," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4), pages 1-35.
- Paul Joskow & Edward Kahn, 2001. "A Quantitative Analysis of Pricing Behavior in California's Wholesale Electricity Market During Summer 2000," NBER Working Papers 8157, National Bureau of Economic Research, Inc.
- Joskow, P. & Edward Kahn, 2002. "A Quantitative Analysis of Pricing Behavior In California’s Wholesale Electricity Market During Summer 2000," Cambridge Working Papers in Economics 0211, Faculty of Economics, University of Cambridge.
- F0 - International Economics - - General
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- Regional Clean Air Incentives Market in Wikipedia (English)
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