Electricity market integration: Redistribution effect versus resource reallocation
Summary In countries with a significant amount of low variable cost generation capacity, the integration of electricity markets poses a real problem with respect to consumers' interests. In such cases, consumers face a significant price rise compared with consumers in countries where low-cost capacities are lacking. This paper analyses this problem both in the short and long term, focusing on a market dominated by nuclear and hydro production. When there are too many restrictions on new capacity developments in low-cost technologies, market integration will lead to surplus redistribution without any production reallocation. This really makes it legitimate to contemplate redistributive compensations towards local consumers in countries which benefited from low variable cost generators at the moment of liberalisation. This paper examines two alternative ways of rent reallocation, one by income with a windfall tax on nuclear producers and the allocation of this revenue to energy efficiency policy funds, and another by price by giving drawing rights on the existing nuclear generators' production to small commercial and domestic consumers, at a level equivalent to the one necessary to maintain regulated prices.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- repec:cpm:opuscl:05 is not listed on IDEAS
- Georg Zachmann, 2005. "Convergence of Electricity Wholesale Prices in Europe?: A Kalman Filter Approach," Discussion Papers of DIW Berlin 512, DIW Berlin, German Institute for Economic Research.
When requesting a correction, please mention this item's handle: RePEc:eee:enepol:v:37:y:2009:i:8:p:2977-2985. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dana Niculescu)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.