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Article: An Analysis of Market Power Mitigation Strategies in Colorado's Electricity Industry.
- Article from:
- The Energy Journal
- Article date:
- June 1, 2001
- Author:
CopyrightCOPYRIGHT 2001 International Association for Energy Economics. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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David M. Quick [*]
Janis M. Carey [**]
We apply an algorithm that optimizes the generation dispatch for a dominant firm to Colorado's electricity market and show that the dominant electricity 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 dominant firm's generation assets, and promoting entry into the generation market can lower prices in a ...