No abstract

We apply an algorithm that optimizes the generation dispatch for a dominant firm to Colorado's electricity market and show that the dominam electn'city generation firm can strategically congest transmission into the region to receive a maximum price over 50% of the time. When it does not get the maximum price, the dominant firm still receives an average markup more than 10% over the competitive price. We use this model to show how mitigation strategies such as enhancing the transmission grid, divesting the dominantfirm generation assets, and promoting entry into the generation market can lower prices in a wholesale electricity generation industry by limiting a dominantfirm's market power.