Competing Suppliers The act of establishing competing suppliers (more substitutes) will increase the price elasticity of demand faced by individual generation companies (so long as transmission is inexpensive and open access prevails), tho...
AI summary Introducing competing suppliers increases price elasticity for individual generation companies, though market-wide effects remain unclear. Long-term market forces may foster substitutes like self-generation and distributed generation, particularly for large industrial customers.
ormance-based rate. Even if the market prices fall below operation and maintenance costs, owners of "must-run" generation may have no incentive to reduce output or to cease operating the power plants. As a result of restructuring, the scop...
AI summary Restructuring introduces new markets (ancillary services, bilateral contracts) that increase supply elasticity by reducing investor risks. However, generation supply remains inelastic due to high capital costs, long lead times, and public resistance to price increases. Retail competition and R&D funding could enhance elasticity through alternative investments like transmission upgrades or energy efficiency.
Research on Elasticities The University of California Energy Institute (UCEI) is currently doing a market power analysis under contract with the Commission 10 which uses estimates of demand and supply elasticities. UCEI will analyze the fr...
AI summary The University of California Energy Institute (UCEI) is analyzing supply and demand elasticities for fringe and dominant firms in spot markets under a Commission contract. The study aims to assess market power by evaluating demand elasticities of dominant firms. Results are expected in November 1996, with reference to Robert Grow's 1996 testimony on generation incentives.