The Political Economy of the Pool

  • Richard Green
Part of the The Springer International Series in Engineering and Computer Science book series (PEPS)


This chapter studies the Electricity Pool of England and Wales, better known simply as “the Pool”. Practically all the electricity sold on the public supply system has to pass through the Pool, and the Pool sets an extremely visible marker price for electricity, even though most trading is actually based on contracts which hedge the Pool price. The chapter explains how the Pool was created, and why its rules and procedures were chosen. There are economic justifications for these rules, but there were often political reasons for choosing them, and the chapter title reflects this. The chapter then discusses some of the experience gained over the seven years for which the Pool has been operating. The Pool has succeeded in its task of coordinating the system’s day-to-day operation, but it has attracted many criticisms for the level and volatility of its prices, and for the complexity of its rules. Those rules can be changed, but the Pool was deliberately designed to make such changes difficult, which has impeded some useful reforms. Outsiders, including the large customers who are among the Pool’s fiercest critics, have also suggested potential changes to the Pool. Some of these seem unlikely to lead to greater efficiency, but the political need to “do something” about the Pool has ensured that any plausible suggestion can receive a hearing.


Strike Price Spot Market Electricity Regulation Bilateral Contract Pool Rule 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


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Copyright information

© Springer Science+Business Media New York 1998

Authors and Affiliations

  • Richard Green
    • 1
  1. 1.University of CambridgeCambridgeEngland

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