A Spot Market for Electricity

Proposals for increased competition in the electric utility industry have suffered from a lack of empirical evidence on the feasibility of coordinating decentralized facilities. The Florida Energy Broker, which has operated since 1978, is an example of a spot market for short-term wholesale energy. Although Florida utilities operate in a regulated environment, the Broker provides important evidence on the feasibility of increasing competition in the industry. This Note provides a preliminary analysis of the Broker. It considers the success of the Broker in organizing efficient economy interchange, the potential of extending the Broker to allow for more competition, and some problems that can be expected to limit extension possibilities given the current structure of the industry. The Note suggests areas where further empirical or analytical research is needed to assess the desirability of introducing further competition into the wholesale sector of the electric utility industry.