Reform of the Electricity Supply Industry

Electricity markets around the world are becoming more competitive, partly in response to technological changes. Successful restructuring requires an understanding of the sources of monopoly power in the industry, and separation of competitive from natural monopoly elements. Competitive wholesale electricity markets require transparent regulatory and cross-subsidy mechanisms. Such changes in turn make public ownership less relevant for protecting consumers. Competitive markets are also more risky for owners, and governments are not ideally suited to financing large and very risky business ventures. The arguments are illustrated by reference to the reforms undertaken in Australia in the last decade.

Pricing behaviour under competition in the UK electricity supply industry

This paper investigates the evolution of electricity prices for domestic customers in the UK following the introduction of competition. The empirical analysis is based on a panel data set containing detailed information about electricity supply prices over the period 1999 to 2006. The analysis aims to test theoretical hypotheses about the nature of consumers’ switching and search costs. The econometric analysis of persistence and price dispersion provides only limited support for the view that the market is becoming more competitive and also indicates that there remain significant potential benefits to consumers from searching alternative suppliers

Sri Lankan Electricity Supply Industry: A Critique of Proposed Reforms

In 2002 the Government of Sri Lanka proposed power sector policy guidelines for the first time in its history in order to facilitate the restructuring of the sector. This paper attempts to critically examine and appraise the Government’s proposals with suggestions for improvements. The methodology employed is to first examine the requirements of the Sri Lankan power sector by analysing the current problems that the power sector faces and to empirically estimate electricity demand to identify the future consumption and capacity expansion needs of the sector. Secondly, it is assessed to what extent the proposed reforms address the requirements of the sector identified above. Finally, alternative proposals are introduced in order to address the identified flaws in the current proposed reforms.Developing Countries, Electricity Supply Industry, Power Policy, Sri Lanka

Introducing Competition in the French Electricity Supply Industry: The Destabilisation of a Public Hierarchy in an Open Institutional Environment

The French electricity supply industry is characterized by a vertically integrated monopoly and public ownership and when the government introduced market rules, it was with the aim of preserving the integration of the public incumbent as a national champion. This had two paradoxical effects in favour of competition development and the building of safeguards for entrants

The Daunting Challenges of the Nigerian Electricity Supply Industry

The future state of the Nigerian Electricity Supply Industry (NESI) is seemingly beginning to look promising amid the recent change in the country’s leadership and the increase in tariffs. Nevertheless, more still needs to be done to ensure the quality, availability and reliability of electricity supply to the citizenry; thus restoring the much-needed faith in the ongoing sector reforms as the Nigerian Electricity Regulatory Commission (NERC) set about implementing the Electric Power Sector Reform Act of 2005. With the wide array of energy sources available in the country such as biomass, large and small hydro, daily solar radiation of up to 7.5kWh/m2, coal, lignite, wind, municipal solid waste (MSW), niobium, natural gas and crude oil, sufficient electricity generation using all these available sources of energy should be a given but this is not the case. Hence this paper carefully analyses each segment of the NESI and successfully identifies the root-causes of constant power outages in the country which has led to a high unreliability of supply, with a view to proffering workable solution

Pool-based electricity market model for Malaysia electricity supply industry considering minimum generation capacity payment

Malaysia is improving its electricity supply industry to become more transparent, productive and competitive with the introduction of the single buyer market model. However, since the electricity demand is lower than the reserved capacity, the implementation of this market model does not provide transparent competition as Tenaga Nasional Berhad (TNB) has suffered massive profit erosion because of monthly capacity payment that should be paid to Independent Power Producers (IPP) regardless of electricity usage. Since 2005, the Malaysia Electricity Supply Industry (MESI) has planned to change to the pool market model as it is recognized as a model which could overcome the shortcomings of the single buyer market model. However, there are a few issues on introducing the pool model such as price fluctuation and market power exercises which could influence the welfare of generators as well as the consumers. Some researchers have developed pool-based market models with the aim to overcome the aforementioned issues, but the efficiency and the energy price offered from the generators are not considered. Therefore, this research developed a model introducing the minimum generation capacity payment involving the efficiency of the generators and base load sharing approaches. The proposed model was tested using the 2, 16 and 24 generator test systems involving IPPs and Tenaga Nasional Berhad Generation (TNBG) around Peninsular Malaysia for an economic analysis to highlight the merits of the proposed model in terms of generation revenue and demand payment. The results have shown that the proposed market model ensures the intermediate value of total generation revenue which decreased from 1.99% to 4.67% and 3% to 9.62% during the weekday and weekend, respectively. The demand payment decreased as it is proportional to the generation revenue. However, this proposed model did not consider market uncertainties. This findings can be applied for MESI and globally, in assisting and creating a new policy to achieve a better electricity market model