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Title:
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Strategic generation with conjectured transmission price responses in a mixed transmission pricing system. Part II: Application
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Author(s):
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Published by:
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Publication date:
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ECN
Policy Studies
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1-5-2004
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ECN report number:
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Document type:
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ECN-RX--04-088
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Article (scientific)
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Number of pages:
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8
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Published in: IEEE TRANSACTIONS ON POWER SYSTEMS, VOL. 19, NO. 2, MAY 2004 (), , , Vol., p.-.
Abstract:
The conjectured transmission
price response model presented in the first of this two-paper series
considers the expectations of oligopolistic generators regarding how
demands for transmission services affect the prices of those services.
Here, the model is applied to northwest Europe, simulating a mixed transmission
pricing system including export fees, a path-based auction system for
between-country interfaces, and implicit congestion-based pricing of
internal country constraints. The path-based system does not give credit
for counterflows when calculating export capability. The application
shows that this no-netting policy can exacerbate the economic inefficiencies
caused by oligopolistic pricing by generators. The application also
illustrates the effects of different generator conjectures regarding
rival supply responses and transmission prices. If generators anticipate
that their increased demand for transmission services will increase
transmission prices, then competitive intensity diminishes and energy
prices rise. In the example here, the effect of this anticipation is
to double the price increase that results from oligopolistic (Cournot)
competition among generators.
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