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Offer Price Information and the Exercise of Market Power: The Effect of the Publication of the Historical Trading Report on Competition in the Alberta Electricity Market

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  • Derek E. H. Olmstead
  • Matthew J. Ayres
  • Peter B. R. Lomas

Abstract

This paper considers the effect of the publication of offer price information on unilateral market power in Alberta’s electricity market. This market is an hourly auction characterized by repeated interaction among a small number of producers, common knowledge of costs and production capabilities, and price inelastic demand. For the period July 13, 2000 to May 18, 2017, offer prices for each hour were published by the market operator, the Alberta Electric System Operator (AESO), in the Historical Trading Report (HTR) after the end of the hour. Using counter-factual analysis from 2010 to 2015 (52,584 hours), the paper finds that the effect of offer price changes after the HTR publication was to raise the average hourly price for electricity in Alberta by $2.48/MWh or about 4.2%, which raised the cost of electricity for Alberta consumers during the six-year period by approximately $1.14 billion. Based on an earlier version of this paper, the AESO was instructed by Alberta’s utilities regulator to cease publication of the HTR.

Suggested Citation

  • Derek E. H. Olmstead & Matthew J. Ayres & Peter B. R. Lomas, 2020. "Offer Price Information and the Exercise of Market Power: The Effect of the Publication of the Historical Trading Report on Competition in the Alberta Electricity Market," The Energy Journal, , vol. 41(1_suppl), pages 141-166, June.
    • Handle: RePEc:sae:enejou:v:41:y:2020:i:1_suppl:p:141-166
    DOI: 10.5547/01956574.41.SI1.dolm
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    References listed on IDEAS

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    1. David P. Brown & Andrew Eckert, 2022. "Pricing Patterns in Wholesale Electricity Markets: Unilateral Market Power or Coordinated Behavior?," Journal of Industrial Economics, Wiley Blackwell, vol. 70(1), pages 168-216, March.
    2. David P. Brown & Andrew Eckert & James Lin, 2018. "Information and transparency in wholesale electricity markets: evidence from Alberta," Journal of Regulatory Economics, Springer, vol. 54(3), pages 292-330, December.
    3. repec:aen:journl:33-1-a02 is not listed on IDEAS
    4. Holmberg, Pär & Newbery, David, 2010. "The supply function equilibrium and its policy implications for wholesale electricity auctions," Utilities Policy, Elsevier, vol. 18(4), pages 209-226, December.
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    Cited by:

    1. Brown, David P. & Eckert, Andrew & Silveira, Douglas, 2026. "Wholesale price prediction: The role of information and transparency," Energy Policy, Elsevier, vol. 209(PA).

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