Impact of electricity deregulation in the state of California

The electric industry started as a natural monopoly and was regulated to protect the customers from high prices. Electricity deregulation was expected to reduce prices by introducing competitive markets. Every country or state implementing deregulation has gone through a unique experience. In this paper, the impact of electricity deregulation in the state of California is addressed by first examining historical retail prices, and second by developing a model to estimate the grid marginal costs using historical data. Results show that, although some customers pay lower rates today, the average customer does not pay a lower rate due to deregulation. Moreover, the results of the modeling show that the wholesale prices realized were higher than the marginal cost associated with the grid. Impacts of improved grid management are discussed along with transmission investments, market operator start-up and operation costs, energy and environmental goals, advances in technology on electricity prices, and the impact of deregulation on these factors.

[1]  Rekha Reddy,et al.  Lowering Electricity Prices Through Deregulation , 2000 .

[2]  Paul L. Joskow,et al.  Lessons Learned From Electricity Market Liberalization , 2008 .

[3]  G. Barbose,et al.  Photovoltaic System Pricing Trends , 2014 .

[4]  Joe H. Chow,et al.  Electricity Market Design: An Integrated Approach to Reliability Assurance , 2005, Proceedings of the IEEE.

[5]  Donna Heimiller,et al.  Annual Report on U.S. Wind Power Installation, Cost, and Performance Trends: 2006 , 2008 .

[6]  E. Kahn,et al.  A quantitative analysis of pricing behavior in California's wholesale electricity market during summer 2000 , 2001, 2001 Power Engineering Society Summer Meeting. Conference Proceedings (Cat. No.01CH37262).

[7]  J. Kleissl,et al.  Performance analysis of power output of photovoltaic systems in San Diego County , 2012, 2012 IEEE Power and Energy Society General Meeting.

[8]  Frank A. Wolak,et al.  Diagnosing Market Power in California's Restructured Wholesale Electricity Market , 2000 .

[9]  A. S. Lebedev,et al.  Trends in increasing gas-turbine units efficiency , 2008 .

[10]  R. Wiser,et al.  Annual Report on U.S. Wind Power Installation, Cost, and Performance Trends: 2007 (Revised) , 2008 .

[11]  Mark Bolinger,et al.  Understanding Trends in Wind Turbine Prices Over the Past Decade , 2012 .

[12]  L. Lave,et al.  Electricity Prices and Costs Under Regulation and Restructuring , 2008 .

[13]  Spencer Abraham,et al.  National transmission grid study , 2003 .

[14]  J. Apt.  Competition Has Not Lowered U.S. Industrial Electricity Prices , 2005 .

[15]  John E. Kwoka,et al.  Restructuring the U.S. Electric Power Sector: A Review of Recent Studies , 2008 .

[16]  S. Borenstein,et al.  The U.S. Electricity Industry after 20 Years of Restructuring , 2015 .

[17]  Howard J. Herzog,et al.  Comparative Study on Energy R&D Performance: Gas Turbine Case Study , 1998 .

[18]  Alan G. Isemonger.  Market Redesign and Technology Upgrade: A Nodal Implementation , 2009 .

[19]  Rachel Gelman.  2008 Renewable Energy Data Book , 2009 .

[20]  Paul L. Joskow,et al.  A Quantitative Analysis of Pricing Behavior in California's Wholesale Electricity Market During Summer 2000 , 2001 .

[21]  Satoshi Hata,et al.  Compressor & Steam Turbine Efficiency Improvements & Revamping Opportunities , 2011 .