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Competition and Regulation in Electricity Markets
Featuring an original introduction by the editors, these carefully-selected essays explore the main issues surrounding competition and regulation in electricity markets. The industry is experiencing irresistible forces of change, driven by energy policy objectives; a reassessment of market regulation in the face of high-energy prices; and the response to consumer pressure to agree on what constitutes a fair price for energy. This volume identifies the key articles that underpin the debate across the industries supply chain (generation, supply and networks) from a regulatory perspective (including market power and incentive regulation). The collection then considers the overall impact of liberalisation and future developments.
More Information
Contributors
Contents
More Information
Featuring an original introduction by the editors, these carefully-selected essays explore the main issues surrounding competition and regulation in electricity markets. The industry is experiencing irresistible forces of change, driven by energy policy objectives; a reassessment of market regulation in the face of high-energy prices; and the response to consumer pressure to agree on what constitutes a fair price for energy. This volume identifies the key articles that underpin the debate across the industries supply chain (generation, supply and networks) from a regulatory perspective (including market power and incentive regulation). The collection then considers the overall impact of liberalisation and future developments.
This timely collection will be an invaluable source of reference for academics, practitioners, students and researchers interested in the field of competition and regulation in electricity markets.
This timely collection will be an invaluable source of reference for academics, practitioners, students and researchers interested in the field of competition and regulation in electricity markets.
Contributors
42 articles, dating from 1885 to 2013
Contributors include: W. Baumol, S. Borenstein, H. Hotelling, P. Joskow, S. Littlechild, R. Schmalensee, A. Shleifer, G. Stigler, A. Sweeting, L. Weiss
Contributors include: W. Baumol, S. Borenstein, H. Hotelling, P. Joskow, S. Littlechild, R. Schmalensee, A. Shleifer, G. Stigler, A. Sweeting, L. Weiss
Contents
Contents:
Introduction Sebastian Eyre and Michael G. Pollitt
PART I CLASSICS
A Economics
1. F.P. Ramsey (1927), ‘A Contribution to the Theory of Taxation’, Economic Journal, 37 (145), March, 47–61
2. Harold Hotelling (1938), ‘The General Welfare in Relation to Problems of Taxation and of Railway and Utility Rates’, Econometrica, 6 (3), July, 242–69
3. R.H. Montgomery (1939), ‘Government Ownership and Operation of the Electric Industry’, Annals of the American Academy of Political and Social Science, 201, January, 43–9
4. James C. Bonbright (1941), ‘Major Controversies as to the Criteria of Reasonable Public Utility Rates’, American Economic Review, 30 (5), February, 379–89
5. Nancy Ruggles (1949–1950), ‘Recent Developments in the Theory of Marginal Costs Pricing’, Review of Economic Studies, 17 (2), 107–26
6. M. Boiteux (1960), ‘Peak-Load Pricing’, Journal of Business, 33 (2), April, 157–79
B Regulation
7. Harvey Averch and Leland L. Johnson (1962), ‘Behavior of the Firm Under Regulatory Constraint’, American Economic Review, 52 (5), December, 1052–69
8. George G. Stigler and Claire Friedland (1962), ‘What Can Regulators Regulate? The Case of Electricity’, Journal of Law and Economics, 5, October, 1–16
9. George J. Stigler (1971), ‘The Theory of Economic Regulation’, Bell Journal of Economics and Management Science, 2 (1), Spring, 3–21
10. Sam Peltzman (1976), ‘Toward a More General Theory of Regulation’, Journal of Law and Economics, 19 (2), August, 211–40
11. Harold Demsetz (1968), ‘Why Regulate Utilities?’, Journal of Law and Economics, 11 (1), April, 55–65
12. Leonard W. Weiss (1975), ‘Antitrust in the Electric Power Industry’, in Almarin Phillips (ed.), Promoting Competition in Regulated Markets, Chapter 5, Washington, DC: Brookings Institution Press, 135–73
13. Andrei Shleifer (1985), ‘A Theory of Yardstick Competition’, RAND Journal of Economics, 16 (3), Autumn, 319–27
14. Richard A. Posner (1971), ‘Taxation by Regulation’, Bell Journal of Economics and Management Science, 2 (1), Spring, 22–50
15. William Stanley Jevons (1885), ‘The Coal Question in England’, Science, 5 (108), February, 175–6
PART II INCENTIVE REGULATION
16. William J. Baumol (1982), ‘Productivity Incentive Clauses and Rate Adjustment for Inflation’, Public Utilities Fortnightly, 110, July, 11–18
17. Richard Schmalensee (1989), ‘Good Regulatory Regimes’, RAND Journal of Economics, 20 (3), Autumn, 417–36
18. David E.M. Sappington and Dennis L. Weisman (1994), ‘Designing Superior Incentive Regulation: Modifying Plans to Preclude Recontracting and Promote Performance’, Public Utilities Fortnightly, 132 (5), March, 27–32
19. Paul L. Joskow (2013), ‘Incentive Regulation in Theory and Practice: Electricity Distribution and Transmission Networks’, in Nancy L. Rose (ed.), Economic Regulation and Its Reform: What Have We Learned?, Chapter 5, Chicago, IL and London, UK: University of Chicago Press, 291–344
PART III COMPETITION IN GENERATION
20. Paul L. Joskow (1997), ‘Restructuring, Competition and Regulatory Reform in the U.S. Electricity Sector’, Journal of Economic Perspectives, 11 (3), Summer, 119–38
21. Peter Cramton and Steven Stoft (2005), ‘A Capacity Market that Makes Sense’, Electricity Journal, 18 (7), August/September, 43–54
22. Eric S. Schubert, David Hurlbut, Parviz Adib and Shmuel Oren (2006), ‘The Texas Energy-Only Resource Adequacy Mechanism’, Electricity Journal, 19 (10), December, 39–49
23. Richard Green and Nicholas Vasilakos (2010), ‘Market Behaviour with Large Amounts of Intermittent Generation’, Energy Policy, 38 (7), July, 3211–20
PART IV MARKET POWER
24. David M. Newbery (1995), ‘Power Markets and Market Power’, Energy Journal, 16 (3), 39–66
25. Severin Borenstein, James B. Bushnell and Frank A. Wolak (2002), ‘Measuring Market Inefficiencies in California’s Restructured Wholesale Electricity Market’, American Economic Review, 92 (5), December, 1376–405
26. Richard Green (1999), ‘The Electricity Contract Market in England and Wales’, Journal of Industrial Economics, XLVII (1), March, 107–24
27. Paul L. Joskow and Edward Kahn (2002), ‘A Quantitative Analysis of Pricing Behavior in California’s Wholesale Electricity Market During Summer 2000’, Energy Journal, 23 (4), 1–35
28. Severin Borenstein (2002), ‘The Trouble with Electricity Markets: Understanding California’s Restructuring Disaster’, Journal of Economic Perspectives, 16 (1), Winter, 191–211
29. Andrew Sweeting (2007), ‘Market Power in the England and Wales Wholesale Electricity Market 1995–2000’, Economic Journal, 117 (520), April, 654–85
30. Richard Gilbert and David Newbery (2010), ‘Electricity Merger Policy in the US and EU Electricity Generation’, in François Lévêque and Howard Shelanski, Antitrust and Regulation in the EU and US: Legal and Economic Perspectives, Chapter 6, Cheltenham, UK and Northampton, MA: Edward Elgar Publishing Ltd, 160–81
PART V TRANSMISSION AND SYSTEM OPERATION
31. Roger E. Bohn, Michael C. Caramanis and Fred C. Schweppe (1984), ‘Optimal Pricing in Electrical Networks over Space and Time’, RAND Journal of Economics, 15 (3), Autumn, 360–76
32. William W. Hogan (1992), ‘Contract Networks for Electric Power Transmission’, Journal of Regulatory Economics, 4 (3), September, 211–42
33. Hung-Po Chao and Stephen Peck (1995), ‘A Market Mechanism for Electric Power Transmission’, Journal of Regulatory Economics, 10 (1), July, 25–59
34. Paul Joskow and Jean Tirole (2005), ‘Merchant Transmission Investment’, Journal of Industrial Economics, LIII (2), June, 233–64
35. Stephen C. Littlechild and Carlos J. Skerk (2008), ‘Transmission Expansion in Argentina 4: A Review of Performance’, Energy Economics, 30 (4), July, 1462–90
PART VI RETAIL COMPETITION
36. Chris M. Wilson and Catherine Waddams Price (2010), ‘Do Consumers Switch to the Best Supplier?’, Oxford Economic Papers, 62 (4), October, 647–68
37. Stephen Littlechild (2008), ‘Municipal Aggregation and Retail Competition in the Ohio Energy Sector’, Journal of Regulatory Economics, 34 (2), October, 164–94
PART VII LIBERALISATION IMPACTS
38. Paul L. Joskow (2008), ‘Lessons Learned from Electricity Market Liberalization’, Energy Journal, 29 (2), 9–42
PART VIII FUTURE DEVELOPMENTS
39. Christopher Hood (2010), ‘Can We? Administrative Limits Revisited’, Public Administration Review, 70 (4), July/August, 527–34
40. Michael G. Pollitt (2012), ‘Lessons from the History of Independent System Operators in the Energy Sector’, Energy Policy, 47, August, 32–48
41. L. Lynne Kiesling (2009), ‘Organization Form and the Wires’, in Deregulation, Innovation and Market Liberalization: Electricity Regulation in a Continually Evolving Environment, Chapter 5, London, UK and New York, NY: Routledge, 88–103, notes, references
42. Ahmad Faruqui and Sanem Sergici (2010), ‘Household Response to Dynamic Pricing of Electricity: A Survey of 15 Experiments’, Journal of Regulatory Economics, 38 (2), October, 193–225
Index
Introduction Sebastian Eyre and Michael G. Pollitt
PART I CLASSICS
A Economics
1. F.P. Ramsey (1927), ‘A Contribution to the Theory of Taxation’, Economic Journal, 37 (145), March, 47–61
2. Harold Hotelling (1938), ‘The General Welfare in Relation to Problems of Taxation and of Railway and Utility Rates’, Econometrica, 6 (3), July, 242–69
3. R.H. Montgomery (1939), ‘Government Ownership and Operation of the Electric Industry’, Annals of the American Academy of Political and Social Science, 201, January, 43–9
4. James C. Bonbright (1941), ‘Major Controversies as to the Criteria of Reasonable Public Utility Rates’, American Economic Review, 30 (5), February, 379–89
5. Nancy Ruggles (1949–1950), ‘Recent Developments in the Theory of Marginal Costs Pricing’, Review of Economic Studies, 17 (2), 107–26
6. M. Boiteux (1960), ‘Peak-Load Pricing’, Journal of Business, 33 (2), April, 157–79
B Regulation
7. Harvey Averch and Leland L. Johnson (1962), ‘Behavior of the Firm Under Regulatory Constraint’, American Economic Review, 52 (5), December, 1052–69
8. George G. Stigler and Claire Friedland (1962), ‘What Can Regulators Regulate? The Case of Electricity’, Journal of Law and Economics, 5, October, 1–16
9. George J. Stigler (1971), ‘The Theory of Economic Regulation’, Bell Journal of Economics and Management Science, 2 (1), Spring, 3–21
10. Sam Peltzman (1976), ‘Toward a More General Theory of Regulation’, Journal of Law and Economics, 19 (2), August, 211–40
11. Harold Demsetz (1968), ‘Why Regulate Utilities?’, Journal of Law and Economics, 11 (1), April, 55–65
12. Leonard W. Weiss (1975), ‘Antitrust in the Electric Power Industry’, in Almarin Phillips (ed.), Promoting Competition in Regulated Markets, Chapter 5, Washington, DC: Brookings Institution Press, 135–73
13. Andrei Shleifer (1985), ‘A Theory of Yardstick Competition’, RAND Journal of Economics, 16 (3), Autumn, 319–27
14. Richard A. Posner (1971), ‘Taxation by Regulation’, Bell Journal of Economics and Management Science, 2 (1), Spring, 22–50
15. William Stanley Jevons (1885), ‘The Coal Question in England’, Science, 5 (108), February, 175–6
PART II INCENTIVE REGULATION
16. William J. Baumol (1982), ‘Productivity Incentive Clauses and Rate Adjustment for Inflation’, Public Utilities Fortnightly, 110, July, 11–18
17. Richard Schmalensee (1989), ‘Good Regulatory Regimes’, RAND Journal of Economics, 20 (3), Autumn, 417–36
18. David E.M. Sappington and Dennis L. Weisman (1994), ‘Designing Superior Incentive Regulation: Modifying Plans to Preclude Recontracting and Promote Performance’, Public Utilities Fortnightly, 132 (5), March, 27–32
19. Paul L. Joskow (2013), ‘Incentive Regulation in Theory and Practice: Electricity Distribution and Transmission Networks’, in Nancy L. Rose (ed.), Economic Regulation and Its Reform: What Have We Learned?, Chapter 5, Chicago, IL and London, UK: University of Chicago Press, 291–344
PART III COMPETITION IN GENERATION
20. Paul L. Joskow (1997), ‘Restructuring, Competition and Regulatory Reform in the U.S. Electricity Sector’, Journal of Economic Perspectives, 11 (3), Summer, 119–38
21. Peter Cramton and Steven Stoft (2005), ‘A Capacity Market that Makes Sense’, Electricity Journal, 18 (7), August/September, 43–54
22. Eric S. Schubert, David Hurlbut, Parviz Adib and Shmuel Oren (2006), ‘The Texas Energy-Only Resource Adequacy Mechanism’, Electricity Journal, 19 (10), December, 39–49
23. Richard Green and Nicholas Vasilakos (2010), ‘Market Behaviour with Large Amounts of Intermittent Generation’, Energy Policy, 38 (7), July, 3211–20
PART IV MARKET POWER
24. David M. Newbery (1995), ‘Power Markets and Market Power’, Energy Journal, 16 (3), 39–66
25. Severin Borenstein, James B. Bushnell and Frank A. Wolak (2002), ‘Measuring Market Inefficiencies in California’s Restructured Wholesale Electricity Market’, American Economic Review, 92 (5), December, 1376–405
26. Richard Green (1999), ‘The Electricity Contract Market in England and Wales’, Journal of Industrial Economics, XLVII (1), March, 107–24
27. Paul L. Joskow and Edward Kahn (2002), ‘A Quantitative Analysis of Pricing Behavior in California’s Wholesale Electricity Market During Summer 2000’, Energy Journal, 23 (4), 1–35
28. Severin Borenstein (2002), ‘The Trouble with Electricity Markets: Understanding California’s Restructuring Disaster’, Journal of Economic Perspectives, 16 (1), Winter, 191–211
29. Andrew Sweeting (2007), ‘Market Power in the England and Wales Wholesale Electricity Market 1995–2000’, Economic Journal, 117 (520), April, 654–85
30. Richard Gilbert and David Newbery (2010), ‘Electricity Merger Policy in the US and EU Electricity Generation’, in François Lévêque and Howard Shelanski, Antitrust and Regulation in the EU and US: Legal and Economic Perspectives, Chapter 6, Cheltenham, UK and Northampton, MA: Edward Elgar Publishing Ltd, 160–81
PART V TRANSMISSION AND SYSTEM OPERATION
31. Roger E. Bohn, Michael C. Caramanis and Fred C. Schweppe (1984), ‘Optimal Pricing in Electrical Networks over Space and Time’, RAND Journal of Economics, 15 (3), Autumn, 360–76
32. William W. Hogan (1992), ‘Contract Networks for Electric Power Transmission’, Journal of Regulatory Economics, 4 (3), September, 211–42
33. Hung-Po Chao and Stephen Peck (1995), ‘A Market Mechanism for Electric Power Transmission’, Journal of Regulatory Economics, 10 (1), July, 25–59
34. Paul Joskow and Jean Tirole (2005), ‘Merchant Transmission Investment’, Journal of Industrial Economics, LIII (2), June, 233–64
35. Stephen C. Littlechild and Carlos J. Skerk (2008), ‘Transmission Expansion in Argentina 4: A Review of Performance’, Energy Economics, 30 (4), July, 1462–90
PART VI RETAIL COMPETITION
36. Chris M. Wilson and Catherine Waddams Price (2010), ‘Do Consumers Switch to the Best Supplier?’, Oxford Economic Papers, 62 (4), October, 647–68
37. Stephen Littlechild (2008), ‘Municipal Aggregation and Retail Competition in the Ohio Energy Sector’, Journal of Regulatory Economics, 34 (2), October, 164–94
PART VII LIBERALISATION IMPACTS
38. Paul L. Joskow (2008), ‘Lessons Learned from Electricity Market Liberalization’, Energy Journal, 29 (2), 9–42
PART VIII FUTURE DEVELOPMENTS
39. Christopher Hood (2010), ‘Can We? Administrative Limits Revisited’, Public Administration Review, 70 (4), July/August, 527–34
40. Michael G. Pollitt (2012), ‘Lessons from the History of Independent System Operators in the Energy Sector’, Energy Policy, 47, August, 32–48
41. L. Lynne Kiesling (2009), ‘Organization Form and the Wires’, in Deregulation, Innovation and Market Liberalization: Electricity Regulation in a Continually Evolving Environment, Chapter 5, London, UK and New York, NY: Routledge, 88–103, notes, references
42. Ahmad Faruqui and Sanem Sergici (2010), ‘Household Response to Dynamic Pricing of Electricity: A Survey of 15 Experiments’, Journal of Regulatory Economics, 38 (2), October, 193–225
Index
