Why did British electricity prices fall after 1998?

Green, Rhonda; Evans, Joanne

Abstract

In an attempt to reduce high electricity prices in England and Wales the government has tried to encourage an increase in generation capacity, introduced a more competitive market structure and changed the market rules. Our econometric analysis on monthly data from April 1996 to March 2002 implies support for two conflicting hypotheses. On a static view, increases in competition and the capacity margin were responsible for the fall in prices, while changes in the trading rules had little impact. If generators had been tacitly colluding before NETA, however, the impending change in market rules might have changed their behaviour a few months before the abolition of the Pool. Regressions representing this hypothesis imply that NETA was responsible for a significant part of the reductions in prices after 1998.

Citation

Green, R., & Evans, J. Why did British electricity prices fall after 1998?

• Book Type: Authored Book
• Deposit Date: Sep 9, 2015
• Journal: Research memorandum (University of Hull. Business School) ; 35
• Peer Reviewed: Not Peer Reviewed
• Book Title: Why did British electricity prices fall after 1998?
• ISBN: 192034279
• Keywords: Electricity , Market power, Concentration, Market rules
• Public URL: https://hull-repository.worktribe.com/output/378873