Abstract
The restructuring and privatization of the electricity supply industry in England and Wales were probably the most ambitious parts of the whole privatization program. This chapter examines the wholesale market that was set up for electricity generators, the centerpiece of the restructuring. Despite the technical demands of an electricity network, the government believed that it would be possible to establish a competitive market for bulk electricity and that no economic regulation would be needed. The mechanisms that it set up have succeeded in the tasks of coordinating generation with demand and paying for it. This chapter goes beyond that technical success to examine the economic success, or failure, of the market, for there has been great concern over the dominance of two generating companies and allegations that they have been able to push prices significantly above their marginal costs.
This research was supported by the Economic and Social Research Council grant R000231811, Privatisation and Re-regulation of Network Utilities. I have gained from many discussions with David Newbery, and from and Nils-Henrik von der Fehr and David Harbord‘s comments (1993) about an earlier paper (Green, 1991) on this subject.
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Green, R. (1994). Britain’s Unregulated Electricity Pool. In: Einhorn, M.A. (eds) From Regulation to Competition: New frontiers in electricity markets. Springer, Dordrecht. https://doi.org/10.1007/978-94-011-1368-7_4
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DOI: https://doi.org/10.1007/978-94-011-1368-7_4
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