Econonomics of Energy and Environmental Policy

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Transparency in Electricity Markets

Abstract:
The European Commission is introducing new regulations on submission and publication of data in electricity markets (SPDEM) and on wholesale energy market integrity and transparency (REMIT). I discuss issues relevant for undertaking an evaluation of such regulations. I argue that, for market performance, more information is not always better; indeed, more information may undermine market performance by facilitating behaviour that is either not cost efficient or aims at exercising market power or establishing and maintaining collusion. Moreover, ensuring rational economic behaviour and an efficient and competitive market outcome does not require general access to information at a very detailed level or with a high degree of immediacy. I conclude that to achieve the aims of efficiently functioning wholesale electricity markets, fair and non-discriminatory access to data and a coherent and consistent view of the European wholesale electricity market, it does not seem advisable to go quite so far with respect to immediacy and detail as intended by the new regulations. Keywords: Electricity, Market performance, Information, Transparency, Regulation
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JEL Codes:H23: Taxation and Subsidies: Externalities; Redistributive Effects; Environmental Taxes and Subsidies, Q54: Climate; Natural Disasters and Their Management; Global Warming, Q44:


Keywords: Electricity, Market performance, Information, Transparency, Regulation

DOI: 10.5547/2160-5890.2.2.5


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Published in Volume 2, Number 2 of The Quarterly Journal of the IAEE's Energy Economics Education Foundation.


 

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