Market Power in Electricity Supply

Abstract

Restructuring of the power industry worldwide has brought the issue of market competitiveness to the forefront. While "vertical" market power has been limited by disaggregating generation and transmission, nondiscriminatory access to the transmission system by power suppliers, and the creation of the independent system operator (ISO), "horizontal" and localized market power still survives. In the last few years, the issue of a small number of generators exercising market power has received a great deal of attention, and much has been published on how to identify and mitigate such abuse by market management measures. This paper focuses on the analysis and mitigation of market power in electricity supply.