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Electricity Trade Patterns in a Network: Evidence from the Ontario Market

Author

Listed:
  • Talat S. Genc

    () (Department of Economics,University of Guelph)

  • Pierre-Olivier Pineau

    () (Management Sciences, HEC-Montreal)

  • Ege Yazgan

    () (Department of Economics, Istanbul Bilgi University)

Abstract

We investigate whether trade has any effect on the price formation process in a specific electricity market, and identify interconnected markets that have higher impacts on prices in that market. In particular, we study Ontario wholesale electricity market and its trade with 12 interconnected markets including New York, Michigan, and Minnesota markets. We find that imports are unambiguously related to prices, while exports are not. Furthermore, imports have a positive and significant relationship with prices. We argue that the results are associated with auction design, production constraints, and technological differences. Out of the 12 studied interties, only three have a significant impact on price, two of which are the largest ones.

Suggested Citation

  • Talat S. Genc & Pierre-Olivier Pineau & Ege Yazgan, 2011. "Electricity Trade Patterns in a Network: Evidence from the Ontario Market," Working Papers 1102, University of Guelph, Department of Economics and Finance.
  • Handle: RePEc:gue:guelph:2011-02.
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    File URL: http://www.uoguelph.ca/economics/sites/uoguelph.ca.economics/files/2011-2.pdf
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    More about this item

    Keywords

    electricity trade; simultaneous trade; transmission network; electricity prices; nonlinear Granger causality; Ontario; New York; Michigan; Manitoba; Quebec wholesale electricity markets.;

    JEL classification:

    • C5 - Mathematical and Quantitative Methods - - Econometric Modeling
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy

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