Darryl Biggar - Academia.edu (original) (raw)
Papers by Darryl Biggar
Social Science Research Network, 1998
The OECD Competition Committee organised a seminar on judicial enforcement of competition law in ... more The OECD Competition Committee organised a seminar on judicial enforcement of competition law in October 1996. This document includes an executive summary, an analytical note by Mr. John Clark for the OECD and written submissions by judges and experts, as well as an aide-memoire of the discussion. The judiciary has a central role in the implementation of competition policy. Competition laws are written broadly, and judicial precedent is important in interpreting these statutes, even in non-common law countries. Legal systems vary significantly between Member countries, so specific conclusions about the role of the judiciary in competition enforcement are difficult to articulate. The seminar promoted better understanding of the competition laws of Member countries and of the means for implementing them, thus ultimately promoting international convergence of competition policy. Judges, experts and competition authorities discussed the responsibility of the judiciary in the implementation of competition policy, the role of economics and economists, and accommodation of multiple criteria, standards of proof and judicial review in competition cases. Unclassified OCDE/GD(97)200 JUDICIAL ENFORCEMENT OF COMPETITION LAW MISE EN OEUVRE JUDICIAIRE DU DROIT DE LA CONCURRENCE ORGANISATION FOR ECONOMIC COOPERATION AND DEVELOPMENT Paris 59228 Document complet disponible sur OLIS dans son format d'origine Complete document available on OLIS in its original format 2
The Economics of Electricity Markets
Electricity markets tend to be prone to the exercise of market power. Chapter 15 defines market p... more Electricity markets tend to be prone to the exercise of market power. Chapter 15 defines market power, shows how it is exercised in electricity markets and discusses its consequences for the efficiency of the market. The chapter starts with a definition of market power, distinguishes possessing and exercising market power and then discusses why electricity markets tend to be prone to the exercise of market power. The notion of the price-volume trade-off is introduced and the factors which affect the incentive to exercise that trade-off. The chapter explores the bidding behaviour of generators exercising market power, distinguishing economic and physical withholding. The factors which affect the incentive to exercise market power are discussed including the shape of the residual demand curve, the level of demand, the hedge position of the generator and vertical integration. A distinction is drawn between the impact of short-term and long-term hedge products. The chapter concludes with a discussion of the economic consequences of the exercise of market power and a discussion of whether or not market power is necessary to achieve efficient levels of generation investment.
The Economics of Electricity Markets
Chapter 20 deals with a contemporary issue which represents the next stage for reform of electric... more Chapter 20 deals with a contemporary issue which represents the next stage for reform of electricity distribution networks: the efficient pricing of distribution networks. The chapter starts by emphasising the importance of efficient pricing of distribution networks to achieve the Smart Grid vision of the future. The principles that have been set out in previous chapters can, in principle, be directly applied to distribution networks. There is a potential practical issue regarding the amount of information which may need to be communicated to and from the central market process. This could potentially be overcome by decentralising the optimal dispatch task. The chapter goes on to discuss how retail tariff structures affect the incentives of customers to report local production and consumption, and the incentive for net metering. This leads to a discussion of the incentives for investment in embedded generation. It is shown that customers do not have efficient incentives to invest in local generation such as solar PV. This can lead to a loss of revenue for the distribution business which, in an extreme case, results in a death spiral. The chapter concludes with a discussion of the efficient handling of the problem of declining demand.
The Economics of Electricity Markets, 2014
Having characterised the conditions for optimal investment in generation resources, Chapter 10 ex... more Having characterised the conditions for optimal investment in generation resources, Chapter 10 explores whether private for-profit generation entrepreneurs have an incentive to make efficient investment decisions. This leads to a discussion of concerns with energy-only markets and the missing money problem. The chapter then explores the impact of price caps on the incentives for investment, which leads to a discussion of the role for capacity markets and capacity payments. The chapter concludes with a discussion of the impact of time-averaging of network charges on the incentives for generation investment.
Chapter 4 begins the process of introducing the key economic principles in the analysis of electr... more Chapter 4 begins the process of introducing the key economic principles in the analysis of electricity markets, focusing (for simplicity) on the case where network constraints can be ignored. The chapter first solves the general problem of least cost dispatch of a set of generating resources, before focusing on the special case in which generators have a constant variable cost. The model is then extended to the case of optimal dispatch of both generation and load resources, highlighting the symmetry between generation and load resources. The model is then extended to the case of energy-limited generation resources and ramp rate constraints. The chapter concludes with a discussion of optimal dispatch in the presence of start-up costs.
The majority of this text has focused on efficient or optimal dispatch which involves setting a d... more The majority of this text has focused on efficient or optimal dispatch which involves setting a different locational marginal price for electricity at each node. However, some markets, including the Australian market, do not differentiate electricity prices in this way and instead set a single price for each region. Chapter 19 introduces regional pricing, discusses the problems that arise as a result and discusses how these problems might be resolved. The chapter begins with a definition of regional and/or zonal pricing and discusses the range of approaches to regional pricing. The chapter continues with a discussion of the problems that arise from regional pricing including the behaviour known as disorderly bidding. The discussion covers the impact on the efficiency of dispatch, the impact on the settlement residues and the impact on the balance sheet of the system operator. The chapter goes on to discuss how constrained-on/constrained-off payments might solve this problem, but may...
Wholesale electricity prices are notoriously volatile. Chapter 13 discusses the tools and process... more Wholesale electricity prices are notoriously volatile. Chapter 13 discusses the tools and processes used by market participants to hedge electricity market price risks. The chapter begins with an introduction to the most common instruments used for managing risk, including swaps and caps. The chapter distinguishes price risks and cost-shifting risks and explains how each can be separately hedged. The chapter goes on to show how (under certain assumptions) an abstract generator may choose to construct a portfolio of swaps and caps to perfectly hedge the price risk that it faces. The chapter also discusses the hedging requirements of electricity consumers and how electricity consumers can construct a portfolio to hedge the price risk they face. The chapter introduces the notion that all risk cannot be hedged through arrangements between producers and consumers alone and shows how the hypothetical hedge market trader can, by selling contracts to producers and consumers, reduce the risk...
Intertemporal price volatility is not the only form of risk faced by electricity market participa... more Intertemporal price volatility is not the only form of risk faced by electricity market participants. In addition, traders who trade hedge contracts across differently priced locations also face interlocation price risk. Chapter 14 discusses tools and processes for hedging interlocational price risk. The chapter starts by demonstrating the importance of the merchandising surplus for hedging interlocational price risk. CapFTRs are then introduced as a tool for hedging locational price risk. It is shown how traders can use CapFTRs to construct a portfolio to hedge the risks they face. Conventional fixed-volume financial transmission rights (FTRs) are introduced and their drawbacks as a hedging instrument discussed. The chapter concludes by exploring the role of transmission right prices as a signal for investment in the network.
Chapter 5 asks whether the optimal dispatch outcomes characterised in Chapter 4 can be achieved t... more Chapter 5 asks whether the optimal dispatch outcomes characterised in Chapter 4 can be achieved through a competitive market process. The chapter begins with a description of a smart market process for the electricity industry. It is demonstrated that in the absence of market power a generator will submit an offer curve which matches its marginal cost curve and therefore the resulting dispatch outcome will be efficient. This is followed with a discussion of variations in wholesale market design, such as compulsory gross pool or net pool, single-price or pay-as-bid, and day-ahead versus real-time markets. The impact of price controls and rationing is discussed. The chapter concludes by focusing on the case of inelastic demand, introducing the concept of the price-duration curve and the load-duration curve.
Electric Power Systems Research, 2020
Agenda - A Journal of Policy Analysis and Reform, 2013
Renewable and Sustainable Energy Reviews, 2018
Social Science Research Network, 1998
The OECD Competition Committee organised a seminar on judicial enforcement of competition law in ... more The OECD Competition Committee organised a seminar on judicial enforcement of competition law in October 1996. This document includes an executive summary, an analytical note by Mr. John Clark for the OECD and written submissions by judges and experts, as well as an aide-memoire of the discussion. The judiciary has a central role in the implementation of competition policy. Competition laws are written broadly, and judicial precedent is important in interpreting these statutes, even in non-common law countries. Legal systems vary significantly between Member countries, so specific conclusions about the role of the judiciary in competition enforcement are difficult to articulate. The seminar promoted better understanding of the competition laws of Member countries and of the means for implementing them, thus ultimately promoting international convergence of competition policy. Judges, experts and competition authorities discussed the responsibility of the judiciary in the implementation of competition policy, the role of economics and economists, and accommodation of multiple criteria, standards of proof and judicial review in competition cases. Unclassified OCDE/GD(97)200 JUDICIAL ENFORCEMENT OF COMPETITION LAW MISE EN OEUVRE JUDICIAIRE DU DROIT DE LA CONCURRENCE ORGANISATION FOR ECONOMIC COOPERATION AND DEVELOPMENT Paris 59228 Document complet disponible sur OLIS dans son format d'origine Complete document available on OLIS in its original format 2
The Economics of Electricity Markets
Electricity markets tend to be prone to the exercise of market power. Chapter 15 defines market p... more Electricity markets tend to be prone to the exercise of market power. Chapter 15 defines market power, shows how it is exercised in electricity markets and discusses its consequences for the efficiency of the market. The chapter starts with a definition of market power, distinguishes possessing and exercising market power and then discusses why electricity markets tend to be prone to the exercise of market power. The notion of the price-volume trade-off is introduced and the factors which affect the incentive to exercise that trade-off. The chapter explores the bidding behaviour of generators exercising market power, distinguishing economic and physical withholding. The factors which affect the incentive to exercise market power are discussed including the shape of the residual demand curve, the level of demand, the hedge position of the generator and vertical integration. A distinction is drawn between the impact of short-term and long-term hedge products. The chapter concludes with a discussion of the economic consequences of the exercise of market power and a discussion of whether or not market power is necessary to achieve efficient levels of generation investment.
The Economics of Electricity Markets
Chapter 20 deals with a contemporary issue which represents the next stage for reform of electric... more Chapter 20 deals with a contemporary issue which represents the next stage for reform of electricity distribution networks: the efficient pricing of distribution networks. The chapter starts by emphasising the importance of efficient pricing of distribution networks to achieve the Smart Grid vision of the future. The principles that have been set out in previous chapters can, in principle, be directly applied to distribution networks. There is a potential practical issue regarding the amount of information which may need to be communicated to and from the central market process. This could potentially be overcome by decentralising the optimal dispatch task. The chapter goes on to discuss how retail tariff structures affect the incentives of customers to report local production and consumption, and the incentive for net metering. This leads to a discussion of the incentives for investment in embedded generation. It is shown that customers do not have efficient incentives to invest in local generation such as solar PV. This can lead to a loss of revenue for the distribution business which, in an extreme case, results in a death spiral. The chapter concludes with a discussion of the efficient handling of the problem of declining demand.
The Economics of Electricity Markets, 2014
Having characterised the conditions for optimal investment in generation resources, Chapter 10 ex... more Having characterised the conditions for optimal investment in generation resources, Chapter 10 explores whether private for-profit generation entrepreneurs have an incentive to make efficient investment decisions. This leads to a discussion of concerns with energy-only markets and the missing money problem. The chapter then explores the impact of price caps on the incentives for investment, which leads to a discussion of the role for capacity markets and capacity payments. The chapter concludes with a discussion of the impact of time-averaging of network charges on the incentives for generation investment.
Chapter 4 begins the process of introducing the key economic principles in the analysis of electr... more Chapter 4 begins the process of introducing the key economic principles in the analysis of electricity markets, focusing (for simplicity) on the case where network constraints can be ignored. The chapter first solves the general problem of least cost dispatch of a set of generating resources, before focusing on the special case in which generators have a constant variable cost. The model is then extended to the case of optimal dispatch of both generation and load resources, highlighting the symmetry between generation and load resources. The model is then extended to the case of energy-limited generation resources and ramp rate constraints. The chapter concludes with a discussion of optimal dispatch in the presence of start-up costs.
The majority of this text has focused on efficient or optimal dispatch which involves setting a d... more The majority of this text has focused on efficient or optimal dispatch which involves setting a different locational marginal price for electricity at each node. However, some markets, including the Australian market, do not differentiate electricity prices in this way and instead set a single price for each region. Chapter 19 introduces regional pricing, discusses the problems that arise as a result and discusses how these problems might be resolved. The chapter begins with a definition of regional and/or zonal pricing and discusses the range of approaches to regional pricing. The chapter continues with a discussion of the problems that arise from regional pricing including the behaviour known as disorderly bidding. The discussion covers the impact on the efficiency of dispatch, the impact on the settlement residues and the impact on the balance sheet of the system operator. The chapter goes on to discuss how constrained-on/constrained-off payments might solve this problem, but may...
Wholesale electricity prices are notoriously volatile. Chapter 13 discusses the tools and process... more Wholesale electricity prices are notoriously volatile. Chapter 13 discusses the tools and processes used by market participants to hedge electricity market price risks. The chapter begins with an introduction to the most common instruments used for managing risk, including swaps and caps. The chapter distinguishes price risks and cost-shifting risks and explains how each can be separately hedged. The chapter goes on to show how (under certain assumptions) an abstract generator may choose to construct a portfolio of swaps and caps to perfectly hedge the price risk that it faces. The chapter also discusses the hedging requirements of electricity consumers and how electricity consumers can construct a portfolio to hedge the price risk they face. The chapter introduces the notion that all risk cannot be hedged through arrangements between producers and consumers alone and shows how the hypothetical hedge market trader can, by selling contracts to producers and consumers, reduce the risk...
Intertemporal price volatility is not the only form of risk faced by electricity market participa... more Intertemporal price volatility is not the only form of risk faced by electricity market participants. In addition, traders who trade hedge contracts across differently priced locations also face interlocation price risk. Chapter 14 discusses tools and processes for hedging interlocational price risk. The chapter starts by demonstrating the importance of the merchandising surplus for hedging interlocational price risk. CapFTRs are then introduced as a tool for hedging locational price risk. It is shown how traders can use CapFTRs to construct a portfolio to hedge the risks they face. Conventional fixed-volume financial transmission rights (FTRs) are introduced and their drawbacks as a hedging instrument discussed. The chapter concludes by exploring the role of transmission right prices as a signal for investment in the network.
Chapter 5 asks whether the optimal dispatch outcomes characterised in Chapter 4 can be achieved t... more Chapter 5 asks whether the optimal dispatch outcomes characterised in Chapter 4 can be achieved through a competitive market process. The chapter begins with a description of a smart market process for the electricity industry. It is demonstrated that in the absence of market power a generator will submit an offer curve which matches its marginal cost curve and therefore the resulting dispatch outcome will be efficient. This is followed with a discussion of variations in wholesale market design, such as compulsory gross pool or net pool, single-price or pay-as-bid, and day-ahead versus real-time markets. The impact of price controls and rationing is discussed. The chapter concludes by focusing on the case of inelastic demand, introducing the concept of the price-duration curve and the load-duration curve.
Electric Power Systems Research, 2020
Agenda - A Journal of Policy Analysis and Reform, 2013
Renewable and Sustainable Energy Reviews, 2018