Competitiveness of deregulated bulk-power markets
This study examines whether deregulation of wholesale electricity markets, or bulk power markets, results in competitive bulk power trade. To assess the competitiveness of deregulated bulk power markets, the study uses data from the Southwest Bulk Power Market Experiment. The experiment was conducted in 1984 under the auspices of the Federal Energy Regulatory Commission and allowed six participating utilities flexibility in setting rates for specified bulk power sales. Two approaches are used: (1) simulating bulk power trade under competitive, monopoly, and dominant-firm market assumptions and (2) comparing actual bulk-power prices in the base and experimental years. The simulation approach indicates that the volume and welfare gains of trade under market power assumptions do not appreciably differ from those under the competitive assumption. The simulated volume and welfare gains considerably underestimate the actual volume and welfare gains. The comparisons of actual prices in 1983 and 1984 suggest the possibility that market power may, in a short run, lead to higher prices of bulk power trade under relaxed regulation. The results also indicate that trading utilities may switch from transactions with long-term contracts to short-term transactions.
- Research Organization:
- Rand Graduate Inst., Santa Monica, CA (USA)
- OSTI ID:
- 6166658
- Country of Publication:
- United States
- Language:
- English
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Related Subjects
293000 -- Energy Planning & Policy-- Policy
Legislation
& Regulation
296000* -- Energy Planning & Policy-- Electric Power
COMPETITION
DEREGULATION
ELECTRIC POWER
MARKET
NATIONAL ORGANIZATIONS
POWER
PRICES
RATE STRUCTURE
SIMULATION
US DOE
US FERC
US ORGANIZATIONS
WHOLESALE PRICES