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Pricing policies in electricity generation contingencies


  • David Tobón Orozco



This paper presents a theoretical research about market mechanisms which permit to allocate resources efficiently and to reach optimum reliability in markets subject to volatilities as electricity generation. Specially the necessity to provide additional information concerning prices and contigencies forecasts to improve allocation through spot prices is emphasized. It is also proposed to define a market of reliability insurance, which allows both to minimize social costs in the presence of contingencies in the system and to determine competitively optimum capacity. Then the applicability of these proposals in a market with technical restrictions that has to be coordinated by a central coordinator is evaluated. Finally, the most relevant conclusions are included as well as some research recommendations derived from this work.

Suggested Citation

  • David Tobón Orozco, 1999. "Pricing policies in electricity generation contingencies," Grupo Microeconomía Aplicada 013, Universidad de Antioquia, Departamento de Economía.
  • Handle: RePEc:lde:grupom:013

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    power markets; contingencies; reliability insurances; moral hazard.;

    JEL classification:

    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design


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