Title: The Iberian Electricity Market - Impacts on power producer profits, consumer surplus and social welfare in the wholesale market
Abstract: In the past, power electricity systems were run by vertically integrated monopolistic companies, comprising the generation, transmission, distribution and supply activities. This structure has been criticized on different grounds and reforms have taken place in many countries around the world with the commom feature of the introduction of competition in wholesale markets and giving rise to an environment where customers can freely choose their suppliers. Competition among producers should then be promoted in order to increase economic efficiency with the integration of markets one way to achieve this goal. Considering the upcoming Iberian Electricity Market - IBELM (or MIBEL in its Portuguese and Spanish acronym), we outline the advantages and drawbacks of market integration supported by simulations on market behaviour using scenario analysis. Comparison of prices, power producer profits, consumer surplus and social welfare is computed for the autarcy and integrated markets outcome. Under the hypothesis considered in this work we show that market integration is welfare improving, increases Portuguese consumer surplus and Spanish power producer profits, and decreases Portuguese power producer profits.
Publication Year: 2004
Publication Date: 2004-01-01
Language: en
Type: article
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Cited By Count: 1
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