How likely is long-run competition in electricity generation? Warning signs
Restructuring and deregulation have come to the electric utility industry in the 1990s. Although broad-based, they have centered on a drive to secure competition in generation markets. The Energy Policy Act of 1992 and the Federal Energy Regulatory Commission`s implementation of it are the most visible demonstrations. Underpinning this drive for a competitive generation sector is the assumption - and it is only an assumption at this time - that the evolution of a competitive market structure in generation is possible and likely. If regulation is to be lifted and if consumers are to continue to receive the benefits that are seen in the short run, competition in generation ultimately must be more than competitive rivalry among individual participants; it must be structural in nature. It must have a sustaining equilibrium that cannot lapse back toward situations of monopoly abuse. It must be sustained by the structural protections of numerous competitors and potential competitors, freedom of entry and exit, and easy availability of market information. Long-run market power, whether vested in individual competitors or the overall market, must be absent. To mitigate the market power of an individual competitor, whether through requirements for a transmission filing or otherwise, is not sufficient. The absence of market power can only be demonstrated by structual competition.
- OSTI ID:
- 75505
- Journal Information:
- Electricity Journal, Journal Name: Electricity Journal Journal Issue: 1 Vol. 8; ISSN ELEJE4; ISSN 1040-6190
- Country of Publication:
- United States
- Language:
- English
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