Outline
- Abstract
- Keywords
- Jel Classification
- 1. Introduction
- 2. the Costs and Benefits of Rtos
- 3. Related Literature
- 4. Data
- 5. Model
- 6. Results
- 7. Conclusions
- References
رئوس مطالب
- چکیده
- کلید واژه ها
- 1. مقدمه
- 2. هزینه ها و منافع سازمان های انتقال منطقه ای (RTOs)
- 3. ادبیات مرتبط
- 4. داده
- 5. مدل
- 6. نتایج
- 7. نتیجه گیری
Abstract
Coordination costs in a wholesale electricity market are a relevant public policy consideration. The mitigation of coordination costs, all else equal, should increase participation in the marketplace. Since Federal Energy Regulatory Commission (FERC) Order 888 was issued in 1996, the level of trading activity in bulk electricity markets has increased significantly. In 1999, FERC issued Order 2000 to advance the role of regional transmission organizations (RTOs) in the restructured marketplace for wholesale electricity. RTOs have the potential to reduce the coordination costs, while also having the countervailing effect of causing market participants to incur compliance costs. This paper utilizes the diversity of the United States electricity market and a panel data set representing electric utilities for the period 1990–2009 to study the effects that RTOs have had on wholesale electricity exchange. The paper finds that the presence of a transparent wholesale marketplace for electricity has the effect of increasing participation, but this participation is uneven across types of electric utilities. Greater participation is seen for investor-owned and larger utilities. The results have important implications for policy aimed at wholesale markets and the transmission organizations, as the opportunities afforded by transparency may not be uniformly distributed across all market participants.
Conclusions
It is clear that RTOs and ISOs can provide opportunities in the electricity sector that might not otherwise exist, particularly by facilitating transparent wholesale electricity markets. Transparency can reduce the coordination costs that limit utility participation in the marketplace, and thus limit the realized benefits. However, formal markets also impose transaction and other costs that may discourage participation.
This paper utilized a large data set to estimate the determinants of market participation, showing that the presence of a transparent wholesale marketplace for electricity has the effect of increasing market participation, but this participation is uneven across types of electric utilities. Greater participation is seen for investor-owned and larger utilities, reflecting both the results of Rose and Joskow, who found that investor-owned and larger electric utilities are more willing to adopt technological innovations, and Fabrizio, who found that investor-owned utilities in ISOs tend to meet more of their growing demand by purchasing electricity, as opposed to generating it themselves.
These results have important implications for public policy aimed at increasing transparency in wholesale electricity markets and the organizations that facilitate it. The opportunities afforded by markets may not be evenly distributed across all market participants. However, as experience in the market also appears to affect participation, communication and education efforts may be useful for ensuring that all market participants share in the benefits as well as the costs.