Developing competition in the british energy markets

Completed

Other Cross-Cutting Technologies or Research(Environmental, social and economic impacts)

Basic and strategic applied research

SOCIAL SCIENCES (Economics and Econometrics)

Sociological economical and environmental impact of energy (Policy and regulation)

Professor DMG Newbery
Economics
University of Cambridge

Standard

ESRC

01 October 1997

31 December 1999

27 months

£187,490

No relevance to Underpinning Sectors

East of England

ESRC Energy

Professor DMG Newbery, Economics, University of Cambridge

Objectives not supplied

Our research will explore how far further competition with the ending of the franchise markets for gas and electricity will improve performance in these industries. The regulatory burden might be reduced, but there may be additional opportunities for the exercise of market power which might prejudice network coordination benefits. Our objectives can be summarised as follows: First, we ask whetherand how far competition in the franchise market can replace regulation and attempt to quantify thecosts and benefits arising from changes in the British energy markets. Second, we explore interactions between spot markets in electricity and gas, where generators might sell spot gas instead of generating electricity, or might be interrupted, thereby affecting bidding behaviour, price setting, andthe securityof supply in each market. Third, we study the pricing and regulation of the transmission systems for gas and electricity to see whether market-based solutions for allocating bottleneckfacilities have adverse impacts on market power. Finally, we plan to compare the experience of electricity and gas industries in England and Wales with that of the other areas where reforms are occuringsuch as Scotland, Northern Ireland, California, and Latin America.

24/11/09