Author Archives: EPRG Admin

EP 62

Stephen Littlechild, Carlos Skerk Regulation of Transmission Expansion in Argentina: Part II – Developments since the Fourth Line EP 62  | Non-Technical Summary | PDF Abstract: Argentina’s 1992 transmission expansion policy was subsequently modified by, for example, including provision for transmission companies and proposing quality and substation expansions. There have been several such expansions, and… Continue Reading

EP 61

Stephen Littlechild, Carlos Sherk Regulation of Transmission Expansion in Argentina: Part I – State Ownership, Reform and the Fourth Line EP 61  | Non-Technical Summary | PDF Abstract: From 1992 to 2002, major expansions of the Argentine electricity transmission sector depended on users proposing, voting and paying for such expansions, which were then put out… Continue Reading

EP 59

Karsten Neuhoff Large Scale Deployment of Renewables for Electricity Generation EP 59  | Non-Technical Summary | PDF Abstract: Comparisons of resource assessments suggest resource constraints are not an obstacle to the large-scale deployment of renewable energy technologies. Economic analysis identifies barriers to the adoption of renewable energy sources resulting from market structure, competition in an… Continue Reading

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EP 58

Fabien Roques, David Newbery, William Nuttall Generation Adequacy and Investment Incentives in Britain: from the Pool to NETA EP 58  | Non-Technical Summary | PDF Abstract: Three years after the controversial change of the British market design from compulsory Pool with capacity payments to decentralised energy-only New Electricity Trading Arrangements (NETA) market framework, we compare… Continue Reading

EP 57

Juan-Pablo Montero Tradable Permits with Incomplete Monitoring: Evidence from Santiago’s Particulate Permits Program EP 57 | Non-Technical Summary | PDF Abstract: I explore the advantages of tradable emission permits over uniform emission standards when the regulator has incomplete information on firms’ emissions and costs of production and abatement (e.g., air pollution in large cities). Because… Continue Reading

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EP 56

Juan-Pablo Montero Pollution Markets with Imperfectly Observed Emissions EP 56  | Non-Technical Summary | PDF Abstract: I study the advantages of pollution permit markets over traditional standard regulations when the regulator has incomplete information on firms’ emissions and costs of production and abatement (e.g., air pollution in large cities). Because the regulator only observes each… Continue Reading

EP 55

Andrew Sweeting Market Power in the England and Wales Wholesale Electricity Market 1995-2000 EP 55 | Non-Technical Summary | PDF Abstract: This paper shows that generators exercised increasing market power in the England and Wales wholesale electricity market in the second half of the 1990s despite declining market concentration. It examines whether this was consistent… Continue Reading

EP 54

Paul Joskow Transmission Policy in the United States EP 54 | Non-Technical Summary | PDF Abstract: This paper provides an overview of the development of electric power transmission access, pricing and investment policies in the U.S. over the last 15 years and evaluates the current state of those policies. It includes a discussion of pre-liberalisation… Continue Reading

EP 53

Paul Joskow, Jean Tirole Reliability and Competitive Electricity Markets EP53  | Non-Technical Summary | PDF Abstract: Deregulation of the electricity sector has resulted in conflict between the economic aims of creating competitive wholesale and retail markets, and an engineering focus on reliability of supply. The paper starts by deriving the optimal prices and investment program… Continue Reading

EP 52

Michael Pollitt Electricity Reform in Argentina: Lessons for Developing Countries EP 52  | Non-Technical Summary | PDF Abstract: Argentina was one of the first countries in the world to implement a comprehensive reform of its electricity sector in the recent period. Among developing countries only Chile has had a comparably comprehensive and successful reform. This… Continue Reading

EP 51

Michael Pollitt Electricity Reform in Chile: Lessons for Developing Countries EP 51 | Non-Technical Summary | PDF Abstract: Chile was the first country in the world to implement a comprehensive reform of its electricity sector in the recent period. Among developing countries only Argentina has had a comparably comprehensive and successful reform. This paper traces… Continue Reading

EP 50

Paul Nillesen, Michael Pollitt The Consequences for Consumer Welfare of the 2001-2003 Electricity Distribution Price Review in The Netherlands EP 50  | Non-Technical Summary | PDF Abstract: The Dutch regulatory process for setting the first X-Factors in the electricity distribution sector has gone badly wrong. During two-and-a-half years four different X-Factors were published by the… Continue Reading

EP 48

Karsten Neuhoff, David Newbery Integrating Energy Markets: Does Sequencing Matter? EP 48 | Non-Technical Summary | PDF Abstract: This paper addresses three questions that are relevant to integrating different regional transmission areas. Market integrating normally increases the number of competitors and should therefore reduce prices but the first section shows that prices could rise when… Continue Reading

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EP 47

Torraj Jamasb, Raffaella Mota, David Newbery, Michael Pollitt Electricity Sector Reform in Developing Countries: A Survey of Empirical Evidence on Determinants and Performance EP 47  | Non-Technical Summary | PDF Abstract: This paper reviews the empirical evidence on electricity reform in developing countries. We find that country institutions andsector governance play an important role in… Continue Reading

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EP 46

Torraj Jamasb, David Newbery, Michael Pollitt Core Indicators for Determinants and Performance of Electricity Sector in Developing Countries EP 46 | Non-Technical Summary | PDF Abstract: Since the early 1990s, substantial resources and effort have been spent on implementing market-oriented electricity reform in developing countries. Important sectoral, economic, and social dimensions are involved in electricity… Continue Reading

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EP 45

Stephen Littlechild UK Domestic Energy Contracts: the 28 day rule and experience in Sweden EP 45 | Non-Technical Summary | PDF Abstract: In the UK, domestic customers must be able to terminate energy contracts at 28 days’ notice. This has been seen as a transitional protection for customers and for competition. This paper reviews the… Continue Reading

EP 44

Paul Joskow, Jean Tirole Retail Electricity Competition EP 44 | Non-Technical Summary | PDF Abstract: We explore the implications of load profiling of consumers whose traditional meters do not allow for measurement of their real time consumption. We find the competitive equilibrium does not support the Ramsey two-part tariff. By contrast, when consumers are billed… Continue Reading

EP 43

A Denny Ellerman, Florence Dubroeucq Sources of Emission Reductions: Evidence for US SO2 Emissions 1985-2002 EP 43 | Non-Technical Summary | PDF Abstract: An enduring issue in environmental regulation is whether to clean up existing “old” plants or in some manner to bring in new “clean” plants to replace the old. In this paper, a… Continue Reading

EP 42

Karsten Neuhoff, Laurens De Vries Insufficient Incentives for Investment in Electricity Generation EP 42  | Non-Technical Summary | PDF Abstract: In theory, competitive electricity markets can provide incentives for efficient investment in generating capacity. We show that if consumers and investors are risk averse, investment is efficient only if investors in generating capacity can sign… Continue Reading

EP 41

Richard Green Did English Generators Play Cournot? Capacity withholding in the Electricity Pool EP 41 | Non-Technical Summary | PDF Abstract: Electricity generators can raise the price of power by withholding their plant from the market. We discuss two ways in which this could have affected prices in the England and Wales Pool. Withholding low-cost… Continue Reading

EP 40

Luis Olmos, Karsten Neuhoff Definition of a Balancing Point for Electricity Transmission Contracts EP 40  | Non-Technical Summary | PDF Abstract: Electricity transmission contracts allocate scarce resources, allow hedging against locational price differences and provide information to guide investment. Liquidity is increased if all transmission contracts are defined relative to one balancing point, then a… Continue Reading


Raffaella Mota Comparing Brazil and USA Electricity Performance: What was the Impact of Privatisation? EP 39 | Non-Technical Summary | PDF Abstract: Beginning in 1995 a large proportion of the Brazilian electricity distribution sector went through privatisation and restructuring, whereas privately-owned U.S. utilities did not suffer similar ownership change process. This paper is an empirical… Continue Reading

EP 38

Gert Brunekreeft Regulatory Issues in Merchant Transmission Investment EP 38  | Non-Technical Summary | PDF Abstract: Driven by fear of underinvestment in network assets, merchant investment in electricity transmission networks (MTI) is now legally allowed. Given that MTI is a real possibility, regulators face a new set of questions. After classifying different types of MTI,… Continue Reading

EP 37

Stephen Littlechild Regulated and Merchant Interconnectors in Australia: SNI and Murraylink Revisited EP 37  | Non-Technical Summary | PDF Abstract: This paper examines the history of the various actual and proposed interconnectors between New South Wales and Victoria into South Australia. It covers the period from the earliest proposal for a regulated interconnector to the… Continue Reading

EP 36

Roland Ismer, Karsten Neuhoff Border Tax Adjustments: A Feasible way to Support Stringent Emission Trading EP 36  | Non-Technical Summary | PDF Abstract: CO2 emission certificates internalise effects of fossil fuel consumption on global climate and sea levels. If they are only implemented in some countries, then their effectiveness is limited; Consumption, production and investment… Continue Reading

EP 35

D Giannakis, Tooraj Jamasb, Michael Pollitt Benchmarking and Incentive Regulation of Quality of Service: an Application to the UK Electricity Distribution Utilities EP 35  | Non-Technical Summary | PDF Abstract: Quality of service has emerged as an important issue in post-reform regulation of electricity distribution networks. Regulators have employed partial incentive schemes to promote cost… Continue Reading

EP 34

Janus Bialek Recent Blackouts in US and Continental Europe: Is Liberalisation to Blame? EP 34  | Non-Technical Summary | PDF Abstract: The paper starts with a detailed technical overview of recent blackouts in the US, Sweden/Denmark and Italy in order to analyse common threads and lessons to be learnt. The blackouts have exposed a number… Continue Reading

EP 33

Richard Green Retail Competition and Electricity Contracts EP 33  | Non-Technical Summary | PDF Abstract: Long-term contracts for electricity can counter market power and reduce prices in short-term markets. If electricity retailers face competition, however, companies signing long-term contracts are exposed to the risk that a fall in short-term prices would allow rivals to buy… Continue Reading

EPRG 0517

Hongliang Yang Overview of the Chinese Electricity Industry and Its Current Issues EPRG 0517  | Non-Technical Summary | PDF Abstract: In China, many ongoing problems in the electricity sector can be traced back to the old ‘centrally planned’ economy. Since the start of liberalization in the 1980s, the clash between a liberalized economy (excluding a… Continue Reading

EPRG 0516

Stephen Littlechild Beyond Regulation EPRG 0516 | Non-Technical Summary | PDF Abstract: The ‘standard model’ of electricity reform has been refined in many countries but not extended to others. Government is supplanting the role of regulation. Revised calculations suggest that the benefits of UK electricity privatisation were higher than previously estimated and more widely shared… Continue Reading

EPRG 0514

Felix Müsgens, Karsten Neuhoff Modelling Dynamic Constraints in Electricity Markets and the Costs of Uncertain Wind Output EPRG 0514  | Non-Technical Summary | PDF Abstract: Building on models that represent inter-temporal constraints in the optimal production decisions for electricity generation, the paper analysis the resulting costs and their impact on prices during the day. We… Continue Reading

EPRG 0513

Ian Elders, Graham Ault, Stuart Galloway, James McDonald, Jonathan Koehler, Matthew Leach, Efterpi Lampaditou Electricity Network Scenarios for Great Britain in 2050 EPRG 0513 | Non-Technical Summary | PDF Abstract: The next fifty years are likely to see great developments in the technologies deployed in electricity systems, with consequent changes in the structure and operation… Continue Reading

EPRG 0512

Tooraj Jamasb, William Nuttall, Michael Pollitt New Electricity Technologies for a Sustainable Future EPRG 0512  | Non-Technical Summary | PDF Abstract: There is a growing concern over our reliance on conventional electricity sources and their long-term environmental, climate change, and security of supply implications, and much hope is vested in the ability of future technological… Continue Reading

EPRG 0511

Paul Joskow Incentive Regulation in Theory and Practice: Electricity Distribution and Transmission Networks EPRG 0511 | Non-Technical Summary | PDF Abstract: Modern theoretical principles to govern the design of incentive regulation mechanisms are reviewed and discussed. General issues associated with applying these principles in practice are identified. Examples of the actual application of incentive r… Continue Reading

EPRG 0510

David Newbery Climate Change Policy and its Effect on Market Power in the Gas Market EPRG 0510  | Non-Technical Summary | PDF Abstract: The European Emissions Trading Scheme (ETS) limits CO2 emissions from covered sectors, especially electricity until December 2007, after which a new set of Allowances will be issued. The paper demonstrates that the… Continue Reading

EPRG 0509

Fabien Roques, William Nuttall, David Newbery, Richard De Neufville Nuclear Power: A Hedge against Uncertain Gas and Carbon Prices? EPRG 0509  | Non-Technical Summary | PDF Abstract: High fossil fuel prices have rekindled interest in nuclear power. This paper identifies specific nuclear characteristics making it unattractive to merchant generators in liberalised electricity markets, and argues… Continue Reading

EPRG 0508

Karsten Neuhoff, Michael Grubb, Kim Keats Impact of the Allowance Allocation on Prices and Efficiency EPRG 0508  | Non-Technical Summary | PDF Abstract: Successful cap and trade programs for SO2 and NOx in the US allocate allowances to large emitters based on a historic base line for a period of up to thirty years. National… Continue Reading

EPRG 0507

Tooraj Jamasb, Karsten Neuhoff, David Newbery, Michael Pollitt Long-term Framework for Electricity Distribution Access Charges EPRG 0507  | Non-Technical Summary | PDF Abstract: In order to achieve overall economic efficiency, incentive regulation of electricity distribution utilities must address two important and inter-related issues. First, the utilities’ allowed revenues need to be set at correct levels.… Continue Reading

EPRG 0506

Stephen Littlechild Competition and Contracts in the Nordic Residential Electricity Markets EPRG 0506 | Non-Technical Summary | PDF Abstract: The main Nordic residential electricity markets (Norway, Sweden and Finland) effectively opened to retail competition around 1998. They have not been subject to regulatory controls on prices or other contract terms. Between 11 and 29 per… Continue Reading

EPRG 0505

Karsten Neuhoff, Christian Von Hirschhausen Long-term vs Short-term Contracts: A European Perspective on Natural Gas EPRG 0505  | Non-Technical Summary | PDF Abstract: This paper analyses the economics of long-term gas contracts under changing institutional conditions, mainly gas sector liberalisation. The paper is motivated by the increasingly tense debate in continental Europe, UK and the… Continue Reading

EPRG 0503

Gert Brunekreeft, David Newbery Should Merchant Transmission Investment be Subject to a Must-offer Provision? EPRG 0503  | Non-Technical Summary | PDF Abstract: Merchant electricity transmission investment is a practically relevant example of an unregulated investment with monopoly properties. However, while leaving the investment decision to the market, the regulator may decide to prohibit capacity withholding… Continue Reading

Arjun Mahalingam

Graduate Student in Finance and Economics, Department of Finance, The London School of Economics and Political Science Email: [email protected] Research Interests: Energy economics and finance, Agent-based modelling, Financial economics, Systemic Risk Background: Upon graduating at TU Delft in Sustainable Energy Technology with highest honours, Arjun joined EPRG to work on energy economics and policy. At… Continue Reading

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EPRG 0502

Tooraj Jamasb, Michael Pollitt Deregulation and R&D in Network Industries: The Case of the Electricity Industry EPRG 0502  | Non-Technical Summary | PDF Abstract: Electricity reform has coincided with a significant decline in energy R&D activities. Technical progress is crucial for tackling many energy and environmental issues as well as for long-term efficiency improvement. This… Continue Reading

EPRG 0501

Paul Twomey, Karsten Neuhoff Market Power and Technological Bias: The Case of Electricity Generation EPRG 0501 | Non-Technical Summary | PDF Abstract: It is difficult to eliminate all market power in electricity markets and it is therefore frequently suggested that some market power should be tolerated: extra revenues contribute to fixed cost recovery, facilitate investment… Continue Reading

EP 78

Paul Joskow Patterns of Transmission Investment EP 78  | Non-Technical Summary | PDF Abstract: This paper examines a number of issues associated with alternative analytical approaches for evaluating investments in electricity transmission infrastructure, and institutional arrangements to govern network operation, maintenance and investment. The relationships between transmission investments driven by opportunities to reduce congestion and… Continue Reading

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