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economics.illinoisstate.edu
economics.illinoisstate.edu

... Then every state must set retail rates to recover the full revenue requirements for that level of capacity. Once the RM is set, rates have to recover about the same total revenues whether we have markets or regulation (assuming both structures are efficient).  In regulated states, retail rates must ...
Chapter 19: Cases on Monopoly
Chapter 19: Cases on Monopoly

... compete with the baseball team in your city. Assume that you can get the money, the dates at the stadium, and the teams to play against you. Is it possible that two teams could be profitable? The answer is "probably not" (except in New York, Los Angeles, and perhaps Chicago). To get just enough reve ...
How to Study for Chapter 19 Cases on Monopoly Chapter 19
How to Study for Chapter 19 Cases on Monopoly Chapter 19

... compete with the baseball team in your city. Assume that you can get the money, the dates at the stadium, and the teams to play against you. Is it possible that two teams could be profitable? The answer is "probably not" (except in New York and perhaps Chicago). To get just enough revenue to cover t ...
The Electricity Industry Milestones
The Electricity Industry Milestones

... plants to more cost efficient gas-fired plants. If not, electricity prices today would be about 15 per cent higher. • Liberalisation of the electricity market has also seen consumers benefit from greater choice of retailers, and pricing plans. Today, around 75% of demand have retail choice, and we a ...
Forecasting Prices in Electricity Markets Electricity is one of the most
Forecasting Prices in Electricity Markets Electricity is one of the most

... Electricity is one of the most important goods for our society. Forecasting electricity prices at different time frames is very important for all industry stakeholders for cash flow analysis, capital budgeting and financial procurement as well as regulatory rule-making and integrated resource planni ...
Why Do Electricity Prices Change?
Why Do Electricity Prices Change?

Let Customers Fix Electricity Markets
Let Customers Fix Electricity Markets

... pliers cannot manipulate the market. By observed indicate that when supply is focusing solely on artificially constraining scarce relative to demand, a reduction in behavior on the supply side, FERC ignores demand of 2% to 5% could reduce prices by mechanisms to create demand responsivehalf or more. ...
Energy Market Reform - Gas Infrastructure Europe
Energy Market Reform - Gas Infrastructure Europe

... • Investments: capital cost is often much higher for private firms especially if the regulation is not stable and foreseeable ...
ISO New England Price Plan Opposed
ISO New England Price Plan Opposed

... included in calculations that set the price for energy. In addition, it also provides energy payments to generators that are required by the grid operator to remain on standby for reliability protection during times of energy scarcity. All measures, which had been suspended with the introduction of ...
Regulating Demand Response
Regulating Demand Response

... Bigger-picture regulatory questions ...
1

California electricity crisis

The California electricity crisis, also known as the Western U.S. Energy Crisis of 2000 and 2001, was a situation in which the United States state of California had a shortage of electricity supply caused by market manipulations, illegal shutdowns of pipelines by the Texas energy consortium Enron, and capped retail electricity prices. The state suffered from multiple large-scale blackouts, one of the state's largest energy companies collapsed, and the economic fall-out greatly harmed Governor Gray Davis' standing.Drought, delays in approval of new power plants, and market manipulation decreased supply. This caused an 800% increase in wholesale prices from April 2000 to December 2000. In addition, rolling blackouts adversely affected many businesses dependent upon a reliable supply of electricity, and inconvenienced a large number of retail consumers.California had an installed generating capacity of 45GW. At the time of the blackouts, demand was 28GW. A demand supply gap was created by energy companies, mainly Enron, to create an artificial shortage. Energy traders took power plants offline for maintenance in days of peak demand to increase the price. Traders were thus able to sell power at premium prices, sometimes up to a factor of 20 times its normal value. Because the state government had a cap on retail electricity charges, this market manipulation squeezed the industry's revenue margins, causing the bankruptcy of Pacific Gas and Electric Company (PG&E) and near bankruptcy of Southern California Edison in early 2001.The financial crisis was possible because of partial deregulation legislation instituted in 1996 by the California Legislature (AB 1890) and Governor Pete Wilson. Enron took advantage of this deregulation and was involved in economic withholding and inflated price bidding in California's spot markets.The crisis cost between $40 to $45 billion.
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