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Competition and Access in Electricity Markets: ECPR, Global Price Cap, and Auctions

In this paper, we first review in this paper some general principles and fundamental facts and issues which remain at the heart of the movement towards deregulation, restructuring and privatization in network industries in general and in the electricity industry in particular. We then proceed with a discussion of a set of basic procedures through which competition can be introduced in electricity markets, that is the access pricing rules. We compare the efficient component pricing rule with the Ramsey-Boiteux pricing rule and we discuss the global price cap rule. We finally discuss some real world experiences (UK and Canada) and we present some recent ideas on network access auctions as a possible approach to increasing competition with soft or light-handed regulation. We conclude by raising some issues which have been relatively neglected but remain nevertheless important.
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