A review of the monitoring of market power : the possible roles of TSOs in monitoring for market power issues in congested transmission systems
Name
2005-002.pdf
Size
682.05 KB
Format
Adobe PDF
Checksum (MD5)
97e92f86fd42c5f1a6092bfbabaedba9
Author(s)
Twomey, Paul
Date Issued
2005
Publisher
MIT Center for Energy and Environmental Policy Research
Series/Report no.
MIT-CEEPR (Series) ; 05-002WP.
Abstract
The paper surveys the literature and publicly available information on market power monitoring in electricity wholesale markets. After briefly reviewing definitions, strategies and methods of mitigating market power we examine the various methods of detecting market power that have been employed by academics and market monitors/regulators. These techniques include structural and behavioural indices and analysis as well as various simulation approaches. The applications of these tools range from spot market mitigation and congestion management through to long-term market design assessment and merger decisions. Various market-power monitoring units already track market behaviour and produce indices. Our survey shows that these units collect a large amount of data from various market participants and we identify the crucial role of the transmission system operators with their access to dispatch and system information. Easily accessible and comprehensive data supports effective market power monitoring and facilitates market design evaluation. The discretion required for effective market monitoring is facilitated by institutional independence.
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