Electric mergers: Transmission pricing, market size, and effects on competition
The prospect of deregulation has introducted a wave of mergers among electric utilities. Most of these mergers would fail an antitrust review because, by combining generation assets of interconnected utilities, they have substantially reduced potential competition in generation. In fact, one can predict that most mergers of utilities that operate within the same power pool or reliability region will be anticompetitive, even if they are not interconnected. Using an antitrust analysis, this article illustrates the potential anticompetitive effects of mergers between interconnected utilities. It concludes that the relevant geographic market will be an area in which a single, area-wide transmission price is charged. Moreover, it concludes that this area and, hence, the relevant market will likely span an area no larger than the Mid-American Interconnected Network or the Virginia/Carolina subregion of the Southeastern Reliability Council. Assuming markets of this size, the data on resulting concentration will show severe consequences for mergers of the sort that were announced in 1995 and 1996.
- OSTI ID:
- 381250
- Journal Information:
- Fortnightly, Journal Name: Fortnightly Journal Issue: 11 Vol. 134; ISSN FRTNE8
- Country of Publication:
- United States
- Language:
- English
Similar Records
Market power, mergers, and deregulation: A critique of the FERC`s new merger guidelines
Deregulation and mergers: Is consolidation inevitable?