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Why did British Electricity Prices Fall after 1998?

Author

Listed:
  • Evans, J.
  • Green, R.

Abstract

In an attempt to reduce high electricity prices in England and Wales the government has reduced concentration among generators and introduced New Electricity Trading Arrangements (NETA). Econometric analysis on monthly data from April 1996 to September 2002 implies support for two conflicting hypotheses. On a static view, increases in competition and the capacity margin were chiefly responsible for the fall in prices. If generators had been tacitly colluding before NETA, however, the impending change in market rules might have changed their behaviour a few months before the abolition of the Pool. That view implies that NETA reduced prices.

Suggested Citation

  • Evans, J. & Green, R., 2003. "Why did British Electricity Prices Fall after 1998?," Cambridge Working Papers in Economics 0326, Faculty of Economics, University of Cambridge.
  • Handle: RePEc:cam:camdae:0326
    Note: CMI26, IO
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    File URL: http://www.econ.cam.ac.uk/electricity/publications/wp/ep26.pdf
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    Keywords

    Electricity; market power; concentration; market rules;

    JEL classification:

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

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