The effect of falling market concentration on prices, generator behaviour and productive efficiency in the England and Wales electricity market
A universal prediction of the various oligopoly models used to predict and explain behaviour in the England and Wales (E&W) electricity wholesale market is that divestiture of plants by the two large incumbent generators and new entry should have led to lower prices and mark-ups. However, even t...
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| Format: | Working Paper |
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MIT Center for Energy and Environmental Policy Research
2009
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| Online Access: | http://hdl.handle.net/1721.1/44975 |
| _version_ | 1811086569760620544 |
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| author | Sweeting, Andrew |
| author2 | Massachusetts Institute of Technology. Center for Energy and Environmental Policy Research. |
| author_facet | Massachusetts Institute of Technology. Center for Energy and Environmental Policy Research. Sweeting, Andrew |
| author_sort | Sweeting, Andrew |
| collection | MIT |
| description | A universal prediction of the various oligopoly models used to predict and explain behaviour in the England and Wales (E&W) electricity wholesale market is that divestiture of plants by the two large incumbent generators and new entry should have led to lower prices and mark-ups. However, even though the market has become significantly less concentrated over the 1990s through both of these mechanisms the regulator (OFGEM, formerly OFFER) has continued to complain about high prices and generator manipulation of prices. This led to OFGEM taking two generators (AES and British Energy) to the Competition Commission in a (failed) attempt to have market abuse conditions inserted in their licences, and has led to the Pool being replaced by a new set of arrangements (NETA) in Spring 2001. These new arrangements are controversial (see Sweeting (2000) for a discussion), and their success is likely to be partly determined by how much market power the generators still have. This paper gathers evidence on what happened to prices and mark-ups during the last five years of the Pool, which have been studied relatively little compared to the first five years, and also seeks to make several more original contributions. |
| first_indexed | 2024-09-23T13:27:45Z |
| format | Working Paper |
| id | mit-1721.1/44975 |
| institution | Massachusetts Institute of Technology |
| last_indexed | 2024-09-23T13:27:45Z |
| publishDate | 2009 |
| publisher | MIT Center for Energy and Environmental Policy Research |
| record_format | dspace |
| spelling | mit-1721.1/449752019-04-10T11:14:28Z The effect of falling market concentration on prices, generator behaviour and productive efficiency in the England and Wales electricity market Sweeting, Andrew Massachusetts Institute of Technology. Center for Energy and Environmental Policy Research. A universal prediction of the various oligopoly models used to predict and explain behaviour in the England and Wales (E&W) electricity wholesale market is that divestiture of plants by the two large incumbent generators and new entry should have led to lower prices and mark-ups. However, even though the market has become significantly less concentrated over the 1990s through both of these mechanisms the regulator (OFGEM, formerly OFFER) has continued to complain about high prices and generator manipulation of prices. This led to OFGEM taking two generators (AES and British Energy) to the Competition Commission in a (failed) attempt to have market abuse conditions inserted in their licences, and has led to the Pool being replaced by a new set of arrangements (NETA) in Spring 2001. These new arrangements are controversial (see Sweeting (2000) for a discussion), and their success is likely to be partly determined by how much market power the generators still have. This paper gathers evidence on what happened to prices and mark-ups during the last five years of the Pool, which have been studied relatively little compared to the first five years, and also seeks to make several more original contributions. Supported by the MIT Center for Energy and Environmental Policy Research. 2009-04-03T17:04:42Z 2009-04-03T17:04:42Z 2001 Working Paper 2001-003 http://hdl.handle.net/1721.1/44975 52315077 MIT-CEEPR (Series) ; 01-003WP. 35, [15] p application/pdf MIT Center for Energy and Environmental Policy Research |
| spellingShingle | Sweeting, Andrew The effect of falling market concentration on prices, generator behaviour and productive efficiency in the England and Wales electricity market |
| title | The effect of falling market concentration on prices, generator behaviour and productive efficiency in the England and Wales electricity market |
| title_full | The effect of falling market concentration on prices, generator behaviour and productive efficiency in the England and Wales electricity market |
| title_fullStr | The effect of falling market concentration on prices, generator behaviour and productive efficiency in the England and Wales electricity market |
| title_full_unstemmed | The effect of falling market concentration on prices, generator behaviour and productive efficiency in the England and Wales electricity market |
| title_short | The effect of falling market concentration on prices, generator behaviour and productive efficiency in the England and Wales electricity market |
| title_sort | effect of falling market concentration on prices generator behaviour and productive efficiency in the england and wales electricity market |
| url | http://hdl.handle.net/1721.1/44975 |
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