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Failing electricity markets: should we shoot the pools?

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  • Green, Richard

Abstract

This Paper discusses the electricity reforms in California and in England and Wales. In both cases, a centralized spot market played a major role, and both markets have now been abolished. This Paper argues that their disappearance is not evidence that future electricity restructuring should avoid the use of spot markets. Instead, the problems in England and Wales were largely due to market power. In California, problems arising from market power and a tightening demand-supply balance were turned into a disaster because the spot market had not been backed up by hedging contracts.
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Suggested Citation

  • Green, Richard, 2003. "Failing electricity markets: should we shoot the pools?," Utilities Policy, Elsevier, vol. 11(3), pages 155-167, September.
    • Handle: RePEc:eee:juipol:v:11:y:2003:i:3:p:155-167
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    References listed on IDEAS

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    1. Joanne Evans & Richard Green, 2003. "Why did British electricity prices fall after 1998?," Working Papers EP26, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    2. Catherine D. Wolfram, 1998. "Strategic Bidding in a Multiunit Auction: An Empirical Analysis of Bids to Supply Electricity in England and Wales," RAND Journal of Economics, The RAND Corporation, vol. 29(4), pages 703-725, Winter.
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    5. Charles Goldman & Galen Barbose & Joseph Eto, 2002. "California Customer Load Reductions during the Electricity Crisis: Did They Help to Keep the Lights On?," Journal of Industry, Competition and Trade, Springer, vol. 2(1), pages 113-142, June.
    6. John Bower & Derek W. Bunn, 2000. "Model-Based Comparisons of Pool and Bilateral Markets for Electricity," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 1-29.
    7. David M. Newbery, 1998. "Competition, Contracts, and Entry in the Electricity Spot Market," RAND Journal of Economics, The RAND Corporation, vol. 29(4), pages 726-749, Winter.
    8. Richard Green, 1999. "The Electricity Contract Market in England and Wales," Journal of Industrial Economics, Wiley Blackwell, vol. 47(1), pages 107-124, March.
    9. Catherine D. Wolfram, 1999. "Measuring Duopoly Power in the British Electricity Spot Market," American Economic Review, American Economic Association, vol. 89(4), pages 805-826, September.
    10. Stoft, Steven, 1997. "What should a power marketer want?," The Electricity Journal, Elsevier, vol. 10(5), pages 34-45, June.
    11. Michael A. Crew & Paul R. Kleindorfer, 1976. "Peak Load Pricing with a Diverse Technology," Bell Journal of Economics, The RAND Corporation, vol. 7(1), pages 207-231, Spring.
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    Citations

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    Cited by:

    1. Amobi, Marilyn Chikaodili, 2007. "Deregulating the electricity industry in Nigeria: Lessons from the British reform," Socio-Economic Planning Sciences, Elsevier, vol. 41(4), pages 291-304, December.
    2. Brennan, Timothy J. & Palmer, Karen L. & Martinez, Salvador A., 2001. "Implementing Electricity Restructuring: Policies, Potholes, and Prospects," Discussion Papers 10508, Resources for the Future.
    3. Gore, Olga & Viljainen, Satu & Makkonen, Mari & Kuleshov, Dmitry, 2012. "Russian electricity market reform: Deregulation or re-regulation?," Energy Policy, Elsevier, vol. 41(C), pages 676-685.
    4. Woo, C.K. & King, M. & Tishler, A. & Chow, L.C.H., 2006. "Costs of electricity deregulation," Energy, Elsevier, vol. 31(6), pages 747-768.
    5. Thomas, Steve, 2006. "The British Model in Britain: Failing slowly," Energy Policy, Elsevier, vol. 34(5), pages 583-600, March.
    6. Timothy Brennan & Karen Palmer & Salvador Martinez, 2002. "Implementing Electricity Restructuring," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 22(1), pages 99-132, June.
    7. Singh, Anoop & Jamasb, Tooraj & Nepal, Rabindra & Toman, Michael, 2018. "Electricity cooperation in South Asia: Barriers to cross-border trade," Energy Policy, Elsevier, vol. 120(C), pages 741-748.
    8. Aitor Ciarreta & María Espinosa, 2010. "Market power in the Spanish electricity auction," Journal of Regulatory Economics, Springer, vol. 37(1), pages 42-69, February.
    9. René Aïd, 2008. "Long-term risk management for utility companies: the next challenges," Working Papers hal-00409030, HAL.
    10. Sherzod N. Tashpulatov, 2018. "The Impact of Behavioral and Structural Remedies on Electricity Prices: The Case of the England and Wales Electricity Market," Energies, MDPI, vol. 11(12), pages 1-24, December.
    11. Perez, Eloy, 2007. "A model of vertical integration and investment in generation capacity in electricity markets: The case of the bidding game," Socio-Economic Planning Sciences, Elsevier, vol. 41(4), pages 272-290, December.
    12. repec:ehu:dfaeii:6736 is not listed on IDEAS
    13. repec:ehu:dfaeii:6748 is not listed on IDEAS
    14. Singh, Anoop, 2010. "Towards a competitive market for electricity and consumer choice in the Indian power sector," Energy Policy, Elsevier, vol. 38(8), pages 4196-4208, August.
    15. Jiao, Jian-Ling & Ge, Hong-Zhen & Wei, Yi-Ming, 2010. "Impact analysis of China's coal-electricity price linkage mechanism: Results from a game model," Journal of Policy Modeling, Elsevier, vol. 32(4), pages 574-588, July.
    16. J. Robert Branston & Roger Sugden & Pedro Valdez & James Wilson, 2006. "Generating Participation and Democracy: An Illustration from Electricity Reform in Mexico," International Review of Applied Economics, Taylor & Francis Journals, vol. 20(1), pages 47-68.
    17. Dijk, Justin & Willems, Bert, 2011. "The effect of counter-trading on competition in electricity markets," Energy Policy, Elsevier, vol. 39(3), pages 1764-1773, March.
    18. Ferdinand E. Banks, 2005. "An Unsympathetic Lecture on Economic Theory and the Deregulation of Natural Gas," Energy & Environment, , vol. 16(2), pages 303-319, March.
    19. repec:ehu:dfaeii:6747 is not listed on IDEAS

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    JEL classification:

    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities

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