DEREGULATING THE DISTRIBUTION OF ELECTRICITY: PRICE AND WELFARE CONSEQUENCES OF SPATIAL OLIGOPOLY WITH UNIFORM DELIVERED PRICES*

ABSTRACT. Theoretical, spatial oligopoly models are developed and calibrated to simulate the price and welfare consequences of deregulating the retail price of electricity (the distribution function), assuming competing sources of generation supply are available. Two types of distribution competition are considered, retaining the currently used uniform delivered pricing structure: competition for customers at neighboring utilities’ borders and franchise competition. Because duplicate facilities are required for borderline competition, short-run price increases ranging between 14 and 37 percent over existing regulated prices are estimated for upstate New York, largely because deregulated prices reflect replacement, not historic, costs of facilities.     

A FRAMEWORK FOR REGIONAL MODELING AND IMPACT ANALYSIS: AN ANALYSIS OF THE DEMAND FOR ELECTRICITY BY LARGE MUNICIPALITIES IN ONTARIO,CANADA*

ABSTRACT. We propose a mixed fixed and random coefficients framework for regional modeling. The framework allows the presence of both the region-specific effects and commonality of responses across regions. Bayes solutions for estimating parameters of interest and for generating predictions are derived. Within a Bayesian framework a predictive density approach to evaluate the impact of changes is suggested. We apply the methodology to evaluate the impact of new rate structures on Ontario regional demand for electricity.