[en] The aim of this paper is to challenge the widely held view that electricity privatisation in Great Britain (comprised of the markets of England and Wales, and Scotland) was beneficial simply because the price of electricity has subsequently fallen in real terms. This is carried out by comparing the electricity prices actually observed with those that might have been charged had the industry remained in public ownership. In order to do this the paper develops a counterfactual scenario for the likely decisions and effects of a publicly owned industry. This leads the paper to conclude that observed prices are indeed significantly higher than they would have been had privatisation not occurred. (author)

[en] Well-designed auctions work favorably for allocating idiosyncratic properties efficiently. Auctions are used to allocate entry capacity for United Kingdom gas and inter-connector capacity for electricity in several European Union countries and can work well for allocating existing capacity, though careful auction design is needed to mitigate potential market power. Using auction prices to guide investment decisions in networks is problematic if bidders fear that sub-optimal investment will be compensated by regulatory fiat, lowering future capacity values. (Author)

[en] This article analyzes how governments and an oil company adapted their institutional and organization frameworks to manage actual and potential environmental impacts of oil-related activities in Brazil. Two major factors are important for understanding these changes. First, the monopoly of the state to explore and produce oil is over. Foreign companies have entered Brazil and increased the competitiveness of the oil sector. Second, major oil spills into waterways in recent years resulted in severe fines and an increasing outcry from government and civil society representatives for greater control over oil activities. These two factors raised a debate about what are, or should be, the roles of various stakeholders involved in controlling oil activities and their impacts on the environment. Legislative changes assigned different roles to the state oil company, to a newly created regulatory agency, to the Navy and to federal and state environmental agencies. Because many of the legal changes were not well defined, accountability among institutional actors remained unclear and institutional conflicts about who is accountable for what were likely to occur. As well, government organizations, public prosecutors, media and civil society increasingly influenced the regulation of both government agencies and companies. As a result, these responded to regulatory change and market forces by changing their relations with external stakeholders and their organizational arrangements for environmental management. This article identifies some of the institutional conflicts in selected case studies from the oil industry, the difficulties in clarifying regulatory roles within the industry, and responses in terms of the environmental strategies of regulatory bodies and oil companies, specifically the Brazilian state company, Petrobas. (author)

[en] Acid rain abatement strategies in Europe are currently being discussed in view of the expiration of the Helsinki Protocol on SO₂ emission reduction. The changing energy situation in Eastern European countries is expected to have an influence on the deposition pattern in Europe. The paper presents a consistent energy scenario for Eastern European countries and compares optimal strategies to reduce SO₂ emissions. These strategies are based on runs with the RAINS model in which environmental targets have been set based on critical loads for sulphur. The analysis shows that economic restructuring and efficiency improvements in Eastern European countries, as well as in Western Europe, may result in significantly lower sulphur abatement costs. Potential assistance to Eastern Europe to guarantee desired environmental standards in Western countries should therefore focus not only on providing emission control devices but also on the success of the economic transition process. (author)

[en] A forward reliability market is presented. The market coordinates new entry through the forward procurement of reliability options - physical capacity bundled with a financial option to supply energy above a strike price. The market assures adequate generating resources and prices capacity from the bids of competitive new entry in an annual auction. Efficient performance incentives are maintained from a load-following obligation to supply energy above the strike price. The capacity payment fully hedges load from high spot prices, and reduces supplier risk as well. Market power is reduced in the spot market, since suppliers enter the spot market with a nearly balanced position in times of scarcity. Market power in the reliability market is addressed by not allowing existing supply to impact the capacity price. The approach, which has been adopted in New England and Colombia, is readily adapted to either a thermal system or a hydro system. (author)

[en] Merchant investment in electricity transmission networks (MTI) is now legally allowed. Predominantly driven by the fear of underinvestment, regulators examine this possibility and given that MTI is a possibility, the regulators face a new set of questions. This paper raises and examines regulatory questions especially from a European institutional framework. The regulatory issues concern the competition effect, the ownership, access regime and the must-offer provision. The paper argues to leave light-handed unregulated MTI light handed and refrain from additional measures. In most cases, it is justified to refrain from sector-specific arrangements because competition,law, if necessary at all, will suffice. However, details matter. (author)

[en] Real-time pricing (RTP) has been advocated to address extreme price volatility and market power in electricity markets. This study of Niagara Mohawk Power Corporation's largest customers analyzes their choices and performance in response to day-ahead, default-service RTP. Overall price response is modest: 119 customers are estimated to reduce their peak demand by about 10% at high prices. Manufacturing customers are most responsive with a price elasticity of 0.16, followed by government/education customers (0.11), while commercial/retail, healthcare and public works customers are, at present, relatively unresponsive. Within market segments, individual customer response varies significantly. (author)

[en] As a new member state of the EU, Slovenia has been required to adopt EU legislation in full. The Slovenian electricity market has been partially opened since 2001. From 1 July 2007, when households became eligible customers, the electricity market opened fully. The electricity reforms carried out so far comprise of market liberalization, unbundling of activities, allowing regulated TPA, formation of an organized power market, adoption of incentive-based price cap regulation and the establishment of an independent regulatory body. The challenge that remains to be addressed is how to enhance competition in an electricity market that has a net importer position with limited cross-border capacity. Envisaged investments in generating and cross-border capacities will partially close the gap between domestic generation and consumption. Furthermore, since Slovenia has one of the largest levels of state ownership in the electricity sector among EU member states, privatization of electricity companies is envisaged in the near future. (author)

[en] The United Kingdom is introducing competition to its residential gas and electricity markets, the first such experiment on a national level. This paper analyses the behaviour of suppliers and consumers in the first market to be opened, based on suppliers' posted prices, two questionnaires to consumers and information from the incumbent. The results confirm predictions about the unwinding of cross-subsidies; a surprisingly small proportion of consumers are switching to other suppliers, and they are not evenly distributed across consumer groups, raising important policy questions about the future of regulation in such markets

[en] Is the projection of cheap and abundant oil correct? Yes, in terms of the resource base. Yes, in terms of (modest) demand growth. Yes, in terms of technology. But only perhaps in terms of the financial constraint. As new exploration and development has to be funded perhaps the marginal cost of oil will inevitably increase; and financing will be harder to come by as equity finance is less available from oil companies and as international banks continue to retreat. As a result, although incremental oil will be found, periodic squeezes cannot be ruled out. (author)