Why did British electricity prices fall after 1998?
Name
2003-007.pdf
Size
213.74 KB
Format
Adobe PDF
Checksum (MD5)
de0e24636c003ff865445ac50ee6ef9c
Author(s)
Evans, Joanne
Green, Richard C.
Date Issued
2003
Publisher
MIT Center for Energy and Environmental Policy Research
Series/Report no.
MIT-CEEPR (Series) ; 03-007WP.
Abstract
In an attempt to reduce high electricity prices in England and Wales the government has reduced concentration among generators and introduced New Electricity Trading Arrangements (NETA). Econometric analysis on monthly data from April 1996 to September 2002 implies support for two conflicting hypotheses. On a static view, increases in competition and the capacity margin were chiefly responsible for the fall in prices. If generators had been tacitly colluding before NETA, however, the impending change in market rules might have changed their behaviour a few months before the abolition of the Pool. That view implies that NETA reduced prices.
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