Category Archives: Working Papers 2002

EP 15

David Newbery, Tanga McDaniel

Auctions and trading in energy markets – an economic analysis

EP 15  | Non-Technical Summary | PDF

Abstract: Auctions are playing an increasingly prominent role in the planning and operation of energy markets. Comparing the New Electricity Trading Arrangements to the former electricity Pool in England and Wales requires some analysis of the relative merits of uniform versus discriminatory pricing rules, and use of the gas network in Britain and electricity interconnectors around Europe is allocated on the basis of auction results. In this paper we discuss the changes in the trading arrangements in the electricity industry in England and Wales as well as some of the results to date. We also look at the wider issue of using auctions to replace regulation by market solutions for managing the natural monopolies in energy markets.

Keywords: auctions, electricity, gas, interconnectors, networks

EP 14

Preetum Domah Technical Efficiency in Electricity Generation – The Impact of Smallness and Isolation of Island Economies EP 14  | Non-Technical Summary | PDF Abstract: This paper conducts a comparative technical efficiency analysis of electricity generators in 16 small island economies using panel data, and two methodologies: data envelopment analysis (DEA) and stochastic frontier analysis… Read more

EP 13

A Denny Ellerman, Juan-Pablo Montero The Temporal Efficiency of SO2 Emissions Trading EP 13  | Non-Technical Summary | PDF Abstract: This paper provides an empirical evaluation of the temporal efficiency of the US Acid Rain Program, which implemented a nationwide market for trading and banking sulphur dioxide (SO2) emission allowances. We first develop a model… Read more

EP 12

David Newbery Regulatory Challenges to European Electricity Liberalistation EP 12  | Non-Technical Summary | PDF Abstract: The European Commission proposed to reform the Electricity and Gas Directives to improve access to transmission, increase cross-border capacity, and fully open the electricity and gas markets. The California electricity crisis has weakened support for liberalisation, removed the commitment… Read more

EP 11

Preetum Domah, Michael G Pollitt, Jon Stern Modelling the costs of electricity regulation: Evidence of human resource constraints in developing countries EP 11  | Non-Technical Summary | PDF Abstract: Successful electricity industry reform depends on the presence of an appropriately staffed regulatory agency for the liberalised sector. However developing countries can have resource constraints that… Read more

EP 10

Gert Brunekreeft Regulatory Threat in Vertically Related Markets: The Case of German Electricity EP 10  | Non-Technical Summary | PDF Abstract: This paper applies the concept of regulatory threat to analyse the electricity supply industry in Germany, where in contrast to other European member states, there is no ex-ante regulation of network access charges. Instead,… Read more

EP 09

Stephen Littlechild Competition in Retail Electricity Supply EP 09  | Non-Technical Summary | PDF Abstract: This paper presents an analysis and defence of competition in retail electricity supply. It includes some account of its development in the UK over the last dozen years, to the point where all retail price controls have now been removed.… Read more

EP 08

Tooraj Jamasb Reform and Regulation of the Electricity Sectors in Developing Countries EP 08  | Non-Technical Summary | PDF Abstract: The 1990s witnessed a worldwide trend toward electricity sector reforms in developed and developing economies. These reforms have generally been based on private participation, regulatory reform, and competition in the sector. This paper reviews and… Read more

EP 07

Richard Gilbert, Karsten Neuhoff, David Newbery Allocating Transmission to Mitigate Market Power in Electricity Networks EP 07 | Non-Technical Summary | PDF Abstract: We ask what conditions transmission contracts increase or mitigate market power. We show that the allocation process of transmission rights is crucial. In an efficient arbitraged uniform price auction, generators will only… Read more

EP 06

Tanga McDaniel, Karsten Neuhoff Auctions to gas transmission access: The British experience EP 06 | Non-Technical Summary | PDF Abstract: When access to monopoly owned networks is constrained auctioning access rights can increase the efficiency of allocations relative to negotiation and grandfathering when there is sufficient competition among network users. Historically, access rights to entry… Read more

EP 05

Karsten Neuhoff Optimal congestion treatment for bilateral electricity trading EP 05  | Non-Technical Summary | PDF Abstract: How to treat transmission constraints in electricity markets that are not based on a pool but on bilateral trading? Three approaches are currently discussed: First, the system operator resolves constraints and socialises costs; second, physical transmission contracts; third,… Read more

EP 04

Tanga McDaniel, Karsten Neuhoff Use of long-term auctions for network investment EP 04  | Non-Technical Summary | PDF Abstract: Short-term auctions for access to entry terminals of the British gas-network appear to successfully allocate scarce resources and capture scarcity rent. Now long-term auctions are being introduced to guide future capacity expansion decisions. In our model… Read more

EP 03

Toru Hattori, Tooraj Jamasb, Michael G Pollitt A comparison of UK and Japanese electricity distribution performance 1985-1998: lessons for incentive regulation EP 03  | Non-Technical Summary | PDF Abstract: International comparisons can be used to study relative efficiency of decision-making units in an industry in a wider context. In particular, cross-country comparisons can, help regulators of… Read more

EP 02

Paul Joskow, Edward Kahn A quantitative analysis of pricing behaviour in California’s wholesale electricity market during summer 2000: the final word EP 02  | Non-Technical Summary | PDF Abstract: During the Summer of 2000, wholesale electricity prices in California were nearly 500% higher than they were during the same months in 1998 or 1999. This… Read more

EP 01

David Newbery Issues and options for restructuring electricity supply industries EP01 | Non-Technical Summary | PDF Abstract: The electricity supply industry is highly capital-intensive, whose success depends critically upon the management of its investment. In most developing countries investment is poorly managed, poorly maintained, and often inadequate. Inadequate regulation or political control lead to low… Read more