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Designing a Competitive Electricity Market

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  • Ma. Joy V. Abrenica

    (UP School of Economics, Diliman, Quezon City)

Abstract

Years after the Electricity Power Industry Reform Act (EPIRA) marked the departure from a centrally-managed highly regulated structure to a decentralized market oriented system, the expected reduction in electricity prices and the investments boost in the sector have not taken place. This note tries to unravel the reform enigma by focusing on the design, specifically the introduction of competition at the wholesale level while limiting the analysis to trading protocols observed in the wholesale electricity spot market (WESM). Could electricity prices have been lower under a different market design from the one currently applied in WESM? Bidding behavior of market participants are largely influenced by auction design so that the observed behavior in one regime cannot be used to predict the outcomes in another. Thus no one auction design is superior and appropriate to all markets.

Suggested Citation

  • Ma. Joy V. Abrenica, . "Designing a Competitive Electricity Market," PCED Policy Notes, Philippine Center for Economic Development.
    • Handle: RePEc:phs:pcedpn:201402
    as

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    File URL: http://www.pced.gov.ph/wp-content/uploads/2015/02/PN-2014-2-digital-rev2.pdf
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    References listed on IDEAS

    as
    1. Alfred E. Kahn & Peter Cramton & Robert H. Porter & Richard D. Tabors, 2001. "Pricing in the California Power Exchange Electricity Market: Should California Switch from Uniform Pricing to Pay-as-Bid Pricing?," Papers of Peter Cramton 01calpx, University of Maryland, Department of Economics - Peter Cramton, revised 27 Jan 2001.
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    Cited by:

    1. Ravago, Majah-Leah V. & Brucal, Arlan Zandro & Roumasset, James & Punongbayan, Jan Carlo, 2019. "The role of power prices in structural transformation: Evidence from the Philippines," Journal of Asian Economics, Elsevier, vol. 61(C), pages 20-33.

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