Assessing the competitiveness of restructured generation service markets
There are many factors to consider when assessing the competitiveness of an electricity generation market - a matter made more complex by the fact that, as products and system conditions change, the market`s size and scope and the extent of market power itself also change. Within the last twelve months state public utility commissions and the Federal Energy Regulatory Commission have acted on several different regulatory initiatives to promote competition in electric power markets at the wholesale and retail levels. One of the fundamental objectives of these electric restructuring initiatives is to introduce and promote competition in markets such as generation that offer the prospect of a competitive result. In its Order 888, which outlined the final rules on open access transmission services, the FERC states that {open_quotes}the Commission`s goal is to ensure that customers have the benefits of competitively priced generation.{close_quotes} While Order 888 clearly addresses and prohibits the exercise of market power in the transmission market, the Commission found in that order that there was {open_quotes}not enough evidence on the record to make a generic determination about whether market power may exist for sales from existing generation. [The Commission continues to have concerns] about how to define the relevant markets and believe[s] that a more rigorous analysis is needed.{close_quotes} The Commission outlined a more rigorous framework for evaluating the competitive implications of mergers and suppliers` potential market power in its recently issued Merger Policy Statement. One of the capacity measures proposed by the Commission for evaluating the competitiveness of generation product markets i.e., the economic capacity measure, is directly applicable to restructured electric markets. The analysis framework outlined by the Commission in the Merger Policy Statement is reviewed.
- OSTI ID:
- 535276
- Journal Information:
- Electricity Journal, Journal Name: Electricity Journal Journal Issue: 3 Vol. 10; ISSN ELEJE4; ISSN 1040-6190
- Country of Publication:
- United States
- Language:
- English
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