Abstract
The Electricity Market (in Europe) undergoes a period of transformations never seen before. The competitive model suggested by the European Commission is based on a gradual increase in the classes of consumers able to choice, freely, their providers. In general, liberalization, deregulation, competition result in a spur to development and low prices for consumers. The Electricity Market isn’t likely to follow such a rule. Electricity Markets are best described and analyzed as first-price multi-unit procurement iterated auctions. In this paper we present an analysis of the Italian case in order to show the effects of deregulation on final prices for users.
Highlights
The 1990s featured a wave of deregulation and privatization of electricity industries in several nations including the U.S, the U.K., Spain and Norway
In this paper we present an analysis of the Italian case in order to show the effects of deregulation on final prices for users
The Florence Forum recommends to use the implicit auction method for managing cross-border congestion the “Use it or Lose it” principle seems to have been widely adopted
Summary
The 1990s featured a wave of deregulation and privatization of electricity industries in several nations including the U.S, the U.K., Spain and Norway. In this paper the author shows the main features of Electricity Markets focusing his attention on the auction system. He considers the Italian case, showing that: without competition in production, expected price will equal the reserve price (related to the previous regulated price) and in this case, auctions are unnecessary and expensive. The market players in electricity industry are: producers, suppliers and traders They are not mutually exclusive and, as a result, the producer may supply electricity to final consumers. The author is going to show that the Italian case follows such a direction In this case even the design of a particular auction [2] for discouraging collusion is useless. The paper is organized as follows: in Section 2 the general features of Electricity Markets are presented, pointing out the attention on the topics of interest for the Italian case; in Section 3 the Italian case is studied; the last Section contains conclusions and comments
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