TY - JOUR
T1 - The Effects of Rivalry with Price Regulation of Electric Power Generation
AU - Braeutigam, Ronald R.
N1 - Copyright:
Copyright 2018 Elsevier B.V., All rights reserved.
PY - 1997
Y1 - 1997
N2 - This article examines how rivalry between an electric utility and nonutility generators (NUGs) affects electricity prices, market structure and welfare. If a utility cannot break even financially when outputs are priced at marginal cost, then the Ramsey optimal price paid by a utility purchasing electricity from a NUG should be below avoided cost, in contrast to the requirements of PURPA. The analysis also compares FDC, Residual and Ramsey prices for a utility's electricity sales. It illustrates how FDC prices may force a utility to exit relatively competitive business markets, eliminating any benefits of economies of scope from serving both business and residential customers.
AB - This article examines how rivalry between an electric utility and nonutility generators (NUGs) affects electricity prices, market structure and welfare. If a utility cannot break even financially when outputs are priced at marginal cost, then the Ramsey optimal price paid by a utility purchasing electricity from a NUG should be below avoided cost, in contrast to the requirements of PURPA. The analysis also compares FDC, Residual and Ramsey prices for a utility's electricity sales. It illustrates how FDC prices may force a utility to exit relatively competitive business markets, eliminating any benefits of economies of scope from serving both business and residential customers.
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U2 - 10.1023/A:1007989730081
DO - 10.1023/A:1007989730081
M3 - Article
AN - SCOPUS:0031541688
SN - 0922-680X
VL - 11
SP - 119
EP - 137
JO - Journal of Regulatory Economics
JF - Journal of Regulatory Economics
IS - 2
ER -