market structure, competition, and regulation in electricity market ...

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DETERMINANTS OF BENEFITS • Benefits of restructuring are likely a function of the but-for world and the nature of reforms • The but-for world differs from country to country • Depends on ownership, regulation, technology, history, institutions, incentives • For example, US had largely l private utilities, with relatively l effective and efficient regulation • Regulation restrained market power, limited transfers from consumers to producers, ensured supply ppyand quality • But little innovation, inefficient distribution of risk, distorted infrastructure • Still, this is case where efficiency gains in generation likely to be modest, at least in short to medium run • By contrast, UK had inefficient publicly owned utilities, with high energy cost production • Potential benefits more straightforward, though still some debate as to exact magnitude
DETERMINANTS, CONTINUED • Several necessary elements for successful reform: • First, ownership unbundling/deintegration, g rather than partial unbundling • US, other countries have tried accounting unbundling, functional unbundling, legal unbundling • Ownership unbundling creates thicker markets (assuming necessary size of market), avoids distorted incentives • Alternatives leave distorted incentives need for regulatory • Alternatives leave distorted incentives, need for regulatory intervention • Unlikely to create equal access • Hence will fail to bring about competition in generation
Page 1 and 2: MARKET STRUCTURE, COMPETITION, AND
Page 3 and 4: EXPERIENCE WITH REFORMS • Most de
Page 5 and 6: STRUCTURAL REFORMS • Multiple dim
Page 7 and 8: VERTICAL INTEGRATION • If full ve
Page 9: THE EVIDENCE, CONTINUED • Some ev
Page 13 and 14: • Third, well designed auction ma
Page 15 and 16: • Five, resolving the role for re
Page 17: LESSON FROM PAST EXPERIENCE • One

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