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Price cap is indispensable to a modern competitive electricity market. As a matter of fact, price capping cannot suppress price fluctuation and evade the market risks effectively. The paper proposes a new price ceiling model, profit capping model (PCM), based on profit space theory in electricity market. Under such a model, peak load units have the same profit uplift as base load ones, but their sunk...
With the developing of the worldwide reform of electricity market, the participants of the market have been encountering unprecedented market risk, especially huge financial risk evoked by the price fluctuations. Although nearly everybody pays attention to the phenomenon of price spiking in electricity markets, there is little clear analysis. Based on the actual historical bid data of Zhejiang electricity...
In electricity markets, it is usually assumed that the markets will naturally produce a competitive result. However, the experience of many countries with liberalized electricity markets has shown that this is not always the case. The aim of this paper is to examine the methods developed by economists for detecting market power, and to provide an overview of the key elements necessary for effective...
Experience with deregulated electricity markets has shown that the exercise of market power is the significant reason that results in market failure. More attention should be paid on economic withholding since it is the main expressive form of exercise of market power. Economic withholding is bidding a relatively high price above marginal cost of their generation units with the expectation of receiving...
Market monitoring has been identified as a basic function in the deregulated electricity environment. In order to supervise power suppliers' bidding behaviors and abuse of market power, three surveillance indices are put forward in this paper, including capacity price index (CPI), bidding difference degree (BDD) and out-of-merit capacity index (OCI). CPI is defined as price-weighted sum of normalized...
To avoid suppliers abusing market power and reduce the financial risk of power purchasers, it is necessary to set up a rational price cap for the markets employing single-buyer model. System surplus capacity percent (SCP) is firstly put forward to reflect the condition of the electricity supply and demand. Based on the historical data of the Zhejiang electricity market in China, the relationship between...
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