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Market power issues in the reformed Russian electricity supply industry

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  • Chernenko, Nadia

Abstract

The paper examines long-run and short-run levels of market power in the liberalised Russian electricity market. We observe that despite potential for market power abuse, actual exercise of market power remained low. We attribute the result to the bid-at-cost rule implemented as a part of a special unit commitment procedure on the day-ahead market. We first look at the industry restructuring and subsequent mergers and acquisitions. The M&A were undertaken in different market zones and did not seem to increase concentration although planned zone integration may worsen competition in the long run. We then examine short-run aspect of market power by estimating hourly price–cost mark-ups and assessing their dynamics in 2010 and 2011, a year preceding and following the market liberalisation, respectively. The hypothesis of actual market power abuse is tested, and rejected, using time series AR models. Further, a Tobit regression shows that the liberalisation decreased the mark-ups by about 1.66 percentage points.

Suggested Citation

  • Chernenko, Nadia, 2015. "Market power issues in the reformed Russian electricity supply industry," Energy Economics, Elsevier, vol. 50(C), pages 315-323.
    • Handle: RePEc:eee:eneeco:v:50:y:2015:i:c:p:315-323
    DOI: 10.1016/j.eneco.2015.05.017
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    References listed on IDEAS

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    Cited by:

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    2. Rubio-Varas, Mar & Muñoz-Delgado, Beatriz, 2017. "200 years diversifying the energy mix? Diversification paths of the energy baskets of European early comers vs. latecomers," Working Papers in Economic History 2017/01, Universidad Autónoma de Madrid (Spain), Department of Economic Analysis (Economic Theory and Economic History).
    3. Sun, Kege & Wu, Libo, 2020. "Efficiency distortion of the power generation sector under the dual regulation of price and quantity in China," Energy Economics, Elsevier, vol. 86(C).
    4. Summanen, Tuomo & Arminen, Heli, 2018. "Ownership unbundling in electricity distribution: The Russian experience," Energy, Elsevier, vol. 161(C), pages 1199-1210.
    5. Yang, Xue & Xu, He & Su, Bin, 2022. "Factor decomposition for global and national aggregate energy intensity change during 2000–2014," Energy, Elsevier, vol. 254(PB).
    6. Szőke, Tamás & Hortay, Olivér & Balogh, Eszter, 2019. "Asymmetric price transmission in the Hungarian retail electricity market," Energy Policy, Elsevier, vol. 133(C).
    7. Bratanova, Alexandra & Robinson, Jacqueline & Wagner, Liam, 2015. "Modification of the LCOE model to estimate a cost of heat and power generation for Russia," MPRA Paper 65925, University Library of Munich, Germany.
    8. Jia, Zhijie & Lin, Boqiang & Wen, Shiyan, 2022. "Electricity market Reform: The perspective of price regulation and carbon neutrality," Applied Energy, Elsevier, vol. 328(C).
    9. Evgeny Lisin & Wadim Strielkowski & Veronika Chernova & Alena Fomina, 2018. "Assessment of the Territorial Energy Security in the Context of Energy Systems Integration," Energies, MDPI, vol. 11(12), pages 1-14, November.
    10. Rubio-Varas, Mar & Muñoz-Delgado, Beatriz, 2019. "Long-term diversification paths and energy transitions in Europe," Ecological Economics, Elsevier, vol. 163(C), pages 158-168.
    11. Xin-gang, Zhao & Shuran, Hu & Hui, Wang & Haowei, Chen & Wenbin, Zhang & Wenjie, Lu, 2024. "Energy, economic, and environmental impacts of electricity market-oriented reform and the carbon emissions trading: A recursive dynamic CGE model in China," Energy, Elsevier, vol. 298(C).

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    More about this item

    Keywords

    Russian electricity market; Market power; Market liberalisation; Market modelling;
    All these keywords.

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities

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