Liberalization of Electricity Supply Industry

Abstract

The habilitation thesis consists of papers analyzing the impact of regulatory reforms on market outcomes and bidding behavior of electricity producers. Each paper uses a different methodology to answer various research questions. In the first paper I analyze the impact of price-cap regulation and divestment series on the electricity price during the peak-demand period over trading days. In order to reflect the impact of divestment series, the market share of each incumbent producer is included in the analysis. The next paper analyzes changes in the incentive and disincentive to exercise market power by submitting price bids in excess of marginal production costs during the peak-demand period. I again focus on the peak-demand period over trading days because producers typically exercise market power namely during the periods when demand is at the peak. The third paper investigates another means of raising electricity prices when electricity producers may withhold cheaper production capacity during the peak-demand period compared to a low-demand period on the same trading day. In such a situation the market operator may need to use more expensive production facilities to satisfy demand for electricity. In the last paper I analyze changes in the price level and volatility over different regulatory regime periods. Such an analysis could be important for detecting tacit collusion when, for example, we observe a higher price level associated at the same time with lower volatility.