Unbundling services in a competitive electricity market
- Univ. of California, Berkeley, CA (United States)
The purpose of this presentation is to provide an in-depth discussion of the possible evolution of unbundling of services in a competitive environment. The author discusses unbundling from both a technical/engineering and an economic perspective. The main thrust of the talk is threefold: (a) that in the long run the potential for unbundling of services is extremely large from an engineering perspective; (b) that the form of the initial industry structure will have an important impact on the extent of service unbundling; and (c) that unbundling of wholesale related services is where most of the initial demand will be. (A) Engineering Perspectives on Unbundling: A large proportion of ancillary services can be provided in a competitive framework with current technologies. The author discusses those that current technologies may not facilitate such a decentralized approach. (B) The relation between unbundling and industry structure: Not all industry structures provide the same incentives for the independent service operator (ISO) to unbundle its services. Direct access provides incentives to suppliers to provide ancillary services to its own customers. Such incentive is limited by more centralized organizational modes. (C) Different Demand for Wholesale and Retail Unbundling: Lessons from other sectors: The experience with unbundling in telecommunications is illuminating. Wholesale unbundling, when allowed, has turned out to be a key component of competition. Retail unbundling is limited by customer sophistication. Indeed, retail unbundling will evolve in waves: initially retail customers will demand bundled services, as complexity of services may overwhelm customer sophistication. As customer sophistication increases and technology improves, the demand for partial unbundling increases providing opportunities for speicialized firms to provide partially unbundled services.
- Research Organization:
- Electric Power Research Inst. (EPRI), Palo Alto, CA (United States)
- OSTI ID:
- 254475
- Report Number(s):
- EPRI-TR-106232; CONF-960330-; TRN: 96:002542-0022
- Resource Relation:
- Conference: 1996 EPRI conference on innovative approaches to electricity pricing: managing the transition market-based pricing, La Jolla, CA (United States), 27-29 Mar 1996; Other Information: PBD: Mar 1996; Related Information: Is Part Of Proceedings: 1996 EPRI conference on innovative approaches to electricity pricing: Managing the transition to market-based pricing; PB: 347 p.
- Country of Publication:
- United States
- Language:
- English
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