Competitiveness of deregulated bulk power markets

by Toshi Hayashi

Purchase Print Copy

 FormatList Price Price
Add to Cart Paperback172 pages $40.00 $32.00 20% Web Discount

This study examines whether deregulation in wholesale electricity markets (or bulk power markets) results in competitive bulk power trade. The study analyzes data from the Southwest Bulk Power Market Experiment, in which participating utilities were allowed flexibility in setting rates for specified sales. The author uses two approaches: (1) simulating bulk power trade under competitive, monopoly, and dominant-firm market assumptions, and (2) comparing actual bulk power prices in the base and experimental years. The simulation approach indicates that the volume and welfare gains of trade under market power assumptions do not appreciably differ from those under the competitive assumptions, providing no clues to the question of competitiveness. On the other hand, the comparison of actual prices between 1983 and 1984 suggests the possibility that market power may, in the short run, lead to higher prices under relaxed regulation. The results also indicate that trading utilities may switch from transactions with long-term contracts to short-term transactions.

This report is part of the RAND Corporation paper series. The paper was a product of the RAND Corporation from 1948 to 2003 that captured speeches, memorials, and derivative research, usually prepared on authors' own time and meant to be the scholarly or scientific contribution of individual authors to their professional fields. Papers were less formal than reports and did not require rigorous peer review.

The RAND Corporation is a nonprofit institution that helps improve policy and decisionmaking through research and analysis. RAND's publications do not necessarily reflect the opinions of its research clients and sponsors.