Abstract
The US Energy Policy Act of 1992 promoted the development of spot markets for electric power by requiring utilities to open their transmission systems to wholesale power sales. In this paper, we specify and estimate a vector error correction model using peak and off-peak electricity spot prices during 1994–1996 covering 11 regional markets in the western United States and test these prices for evidence of market integration. The results show evidence of an efficient and stable wholesale power market.
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