The Potential Economic Impact of Electricity Restructuring in the State of Oklahoma: Phase II Report
Description/Abstract
Because of the recent experiences of several states undergoing restructuring (e.g., higher prices, greater volatility, lower reliability), concerns have been raised in states currently considering restructuring as to whether their systems are equally vulnerable. Factors such as local generation costs, transmission constraints, market concentration, and market design can all play a role in the success or failure of the market. These factors along with the mix of generation capacity supplying the state will influence the relative prices paid by consumers. The purpose of this project is to provide a model and process to evaluate the potential price and economic impacts of restructuring the Oklahoma electric industry. The Phase I report concentrated on providing an analysis of the Oklahoma system in the near-term, using only present generation resources and customer demands. This Phase II study analyzed the Oklahoma power market in 2010, incorporating the potential of new generation resources and customer responses. Five key findings of this Phase II were made: (1) Projected expansion in generating capacity exceeds by over 3,000 MW the demands within the state plus the amount that could be exported with the current transmission system. (2) Even with reduced new plant construction, most new plants could lose money (although residential consumers would see lower rates) unless they have sufficient market power to raise their prices without losing significant market share. (3) If new plants can raise prices to stay profitable, existing low-cost coal and hydro plants will have very high profits. Average prices to customers could be 5% to 25% higher than regulated rates. If the coal and hydro plants are priced at cost-based rates (through long-term contracts or continued regulation) while all other plants use market-based rates then prices are lower. (4) Customer response to real-time prices can lower the peak capacity requirements by around 9%, lowering the need for new capacity and reduce prices during the peak demand. (5) Changes to electric prices on the order of 5% to 20% will have only a modest effect on overall economic activity within the state.
| DOI | 10.2172/814298 |
|---|---|
| Creator/Author: | Hadley, SW |
| Publication Date: | 2001 Oct 30 |
| OSTI Identifier: | OSTI ID: 814298 |
| Report Number(s): | ORNL/CON-485 |
| DOE Contract Number: | AC05-00OR22725 |
| DOI: | 10.2172/814298 |
| Other Number(s): | TRN: US200317%%152 |
| Resource Type: | Technical Report |
| Resource Relation: | Other Information: PBD: 30 Oct 2001 |
| Coverage: | Final |
| Research Org: | ORNL Oak Ridge National Laboratory (US) |
| Sponsoring Org: | OKLAHOMA CORPORATION COMMISSION (US) |
| Subject: | 01 COAL, LIGNITE, AND PEAT; 32 ENERGY CONSERVATION, CONSUMPTION, AND UTILIZATION; CAPACITY; COAL; COMPETITION; CONSTRUCTION; DESIGN; ECONOMIC IMPACT; ECONOMICS; ELECTRICITY; MARKET; OKLAHOMA; PRICES; PROFITS; RELIABILITY; VOLATILITY |
| Country of Publication: | United States |
| Language: | English |
| Format: | Size: 51 pages |
| Update Date: | 2008 Feb 05 |
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