An Analysis of Market Power Mitigation Strategies in Colorado's Electricity Industry

Quick, David M.; Carey, Janis M.

doi:10.5547/issn0195-6574-ej-vol22-no3-3

Cited by 6 publications

(3 citation statements)

References 14 publications

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“…Such limit-pricing is credited with keeping a lid on prices in the U.K. [69]. Meanwhile, Stackelberg models have represented interactions between large power producers ("leaders") and one or more "followers" (smaller generators and/or the ISO) [33], [34], [50], [67].…”

Section: Applications Of Alternative Interactions To Power Marketsmentioning

confidence: 99%

Oligopolistic competition in power networks: a conjectured supply function approach

Day

Hobbs

Pang

2002

IEEE Trans. Power Syst.

407

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Conjectured supply function (CSF) models of competition among power generators on a linearized dc network are presented. As a detailed survey of the power market modeling literature shows, CSF models differ from previous approaches in that they represent each of GenCo's conjectures regarding how rival firms will adjust sales in response to price changes. The CSF approach is a more realistic and flexible framework for modeling imperfect competition than other models for three reasons. First, the models include as a special case the Cournot conjecture that rivals will not change production if prices change; thus, the CSF framework is more general. Second, Cournot models cannot be used when price elasticity of demand is zero, but the proposed models can. Third, unlike supply function equilibrium models, CSF equilibria can be calculated for large transmission networks. Existence and uniqueness properties for prices and profits are reported. An application shows how transmission limits and strategic interactions affect equilibrium prices under forced divestment of generation.This section provides a review of alternative approaches to modeling GenCo interactions in oligopolistic power markets. We include overviews of: equilibrium modeling approaches; representations of GenCo strategic interactions and their application; and complementarity models using dc networks. A. Use of Equilibrium Models for Power MarketsMost models of generator competition are based upon a general approach of defining a market equilibrium as a set of prices, producer input and output decisions, transmission flows, and consumption that simultaneously satisfy each market participant's first-order conditions for maximization of their net benefits [Karush-Kuhn-Tucker (KKT) conditions] while clearing the market (supply demand). The complete set of 0885-8950/02$17.00

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Section: Applications Of Alternative Interactions To Power Marketsmentioning

confidence: 99%

Oligopolistic competition in power networks: a conjectured supply function approach

Day

Hobbs

Pang

2002

IEEE Trans. Power Syst.

407

View full text Add to dashboard Cite

show abstract

“…Meanwhile, a Stackelberg game represents interactions between large and small companies over quantities of products [14]. It is usually used with oligopolies with one or two large dominant companies [15]. Moreover, the Supply Function Equilibrium (SFE) represents companies that compete in supply functions with different prices for different quantities.…”

Section: Introductionmentioning

confidence: 99%

A New Model to Simulate Local Market Power in a Multi-Area Electricity Market: Application to the European Case

2019

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The work presented in this article proposes an original method that models the medium-term market equilibrium under imperfect competition circumstances in multi-area electricity systems. It provides a system analysis considering multiple market splitting possibilities, where local market power may appear according to the status of the interconnections. As a result of new policies and regulations, power systems are increasingly integrating the existing electricity markets in unified frameworks. The integration of electricity markets poses highly challenging tasks due to the uncertainty that comes from the agents’ strategic behaviors which depend on multiple factors, for instance, the state of the interconnections. When it comes to modeling these effects, the purpose is to identify each strategy by using conjectured-price responses that depend on the different states of the system. Consequently, the problem becomes highly combinatorial, which heightens its size as well as its complexity. Therefore, the purpose of this work’s methodology is the reduction of the possible network configurations so as to ensure a computational tractability in the problem. In order to validate this methodology, it has been put to the test in a realistic and full-scale two-year operation planning model of the European electricity market that consists of a group of nine countries.

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“…Willems (2002) studied a very similar market model to that of Borenstein et al and investigated the role of the network operator for promoting competition among the generators. Quick and Carey (2001) applied the "dominant firm priceleadership model" to assess market power in Colorado's electricity industry and showed that strategies exist to reduce market power. Leautier (2000) studied regulatory contracts for the operators of transmission networks and proposed a regulatory contract that induces network operators to "optimally" expand the grid.…”

Section: Introductionmentioning

confidence: 99%

The Competitive Effects of Ownership of Financial Transmission Rights in a Deregulated Electricity Industry

Joung¹,

Baldick²,

Son³

2008

The Energy Journal

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JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact support@jstor.org.. Manho Joung *, Ross Baldick*, and You Seok Son ** In this paper ; we investigate how generators' ownership of financial transmission rights (FTRs) may influence the effects of the transmission lines on competition. In order for concrete analysis , a simple symmetric market model is introduced and FTRs are modeled in two different forms: FTR options and FTR obligations. This paper shows that introducing FTRs in an appropriate manner may reduce the physical capacity needed for the full benefits of competition. Among the competitive effects of ownership of FTRs , we focus on the effects on two possible pure strategy equilibria: the unconstrained Cournot equilibrium and the passive/aggressive equilibrium. We also analyze an extension of the model: asymmetric markets. Finally , a numerical illustration of applying the analysis is presented. International Association for Energy Economics

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An Analysis of Market Power Mitigation Strategies in Colorado's Electricity Industry

Cited by 6 publications

References 14 publications

Oligopolistic competition in power networks: a conjectured supply function approach

Oligopolistic competition in power networks: a conjectured supply function approach

A New Model to Simulate Local Market Power in a Multi-Area Electricity Market: Application to the European Case

The Competitive Effects of Ownership of Financial Transmission Rights in a Deregulated Electricity Industry

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