The Implications of Uniform Pricing in Restructured Electricity Wholesale Markets: Evidence from Alberta
Abstract
This thesis investigates the implications of using a uniform clearing price in restructured electricity wholesale markets, utilizing Alberta’s market as a case study. The first implication of employing a single price is that during transmission congestion a single price can never result in efficient prices, as a single price is not determined by the intersection of supply and demand in both resulting markets. The second implication is that the incentive to build transmission is amplified in order to facilitate competitive outcomes and to avoid congestion, which is confirmed by Alberta experience. Thirdly it is shown that under a single price congestion is not present in prices, and limits the incentive for generation to invest in an optimal location. The implications identified lead to the conclusion that there is a trade-off between having equal wholesale electricity rates and minimizing the delivered cost of electricity.
Description
Keywords
Economics
Citation
Freudenthaler, G. (2016). The Implications of Uniform Pricing in Restructured Electricity Wholesale Markets: Evidence from Alberta (Master's thesis, University of Calgary, Calgary, Canada). Retrieved from https://prism.ucalgary.ca. doi:10.11575/PRISM/28200