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Colombia’s Forward Energy Market

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Abstract

This paper presents a market design for Colombia’s forward energy market, which is scheduled to began in 2008. The forward energy market is an organized market to procure energy for electricity customers on a forward basis. It includes both the regulated market (residential and other small customers) and the nonregulated market (large customers). Currently, regulated customers represent 68% of the total electricity demand and nonregulated customers represent the remaining 32%. The proposed design is novel in that it integrates both the regulated and nonregulated customers into a single organized market. Although the regulated and nonregulated energy products remain distinct, their integration into a single market facilitates arbitrage between the products, improves liquidity, and reduces transaction costs. Both regulated and nonregulated customers benefit from this unified approach. This paper presents all elements of the market design: the product design (see also Cramton 2007), the auction design, and the transition to the new market.

Suggested Citation

  • Peter Cramton, 2007. "Colombia’s Forward Energy Market," Papers of Peter Cramton 07fem, University of Maryland, Department of Economics - Peter Cramton, revised 2007.
    • Handle: RePEc:pcc:pccumd:07fem
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    File URL: https://www.cramton.umd.edu/papers2005-2009/cramton-colombia-forward-energy-market.pdf
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    References listed on IDEAS

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    1. Cramton, Peter, 1998. "Ascending auctions," European Economic Review, Elsevier, vol. 42(3-5), pages 745-756, May.
    2. Lawrence M. Ausubel & Peter Cramton, 2004. "Auctioning Many Divisible Goods," Journal of the European Economic Association, MIT Press, vol. 2(2-3), pages 480-493, 04/05.
    3. Dimitri,Nicola & Piga,Gustavo & Spagnolo,Giancarlo (ed.), 2006. "Handbook of Procurement," Cambridge Books, Cambridge University Press, number 9780521870733, September.
    4. Peter Cramton & Steven Stoft, 2007. "Colombia Firm Energy Market," Papers of Peter Cramton 07cfem, University of Maryland, Department of Economics - Peter Cramton, revised 2007.
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    Cited by:

    1. Ausubel, Lawrence M. & Cramton, Peter, 2010. "Using forward markets to improve electricity market design," Utilities Policy, Elsevier, vol. 18(4), pages 195-200, December.

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    More about this item

    Keywords

    Auctions;

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions

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