COMPETITION AND ELECTRICITY PRICE FORMATION

1
COMPETITION AND ELECTRICITY PRICE FORMATION

• Dr. tefan Bojnec, University of Primorska,
  Slovenia
• stefan.bojnec_at_fm-kp.si
• Polona Osovnikar, Elektro Ljubljana, Slovenia
• polona.osovnikar_at_elektro-ljubljana.si

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WHOLESALE ELECTRICITY MARKET

• Electricity market liberalization
• Organized electricity markets
• short-term electricity market
• per hour, per day
• long-term electricity market
• monthly, quarterly and annually
• Products on wholesale market
• Base
• Peak
• Off-peak

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Source EEX
4
Source EEX, Electro Ljubljana.
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Production and consumption of electricity in
Slovenia since 1990
Source Energy Agency of the Republic of Slovenia
6
Market shares of the largest Slovenian
electricity producers in 2006
Source Energy Agency of the Republic of Slovenia
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RETAIL ELECTRICITY MARKET

• 12 electricity traders in 2006, but only 8
  suppliers to final customers
• Supply of electricity is divided by
• Business users
• Households users
• Deregulated market, free choice of supplier
• Price cap for households (government)

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Market shares of the largest Slovenian retail
electricity suppliers in 2006
Source Energy Agency of the Republic of Slovenia
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Lorenz curve for final electricity users
Source Electro Ljubljana
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Estimated real electricity prices for
industry-business users in EU-15 and Slovenia
since market liberalization
Source Eurelectric (2007), SORS (2007) and own
calculations.
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Linear regression of electricity demand by
industrial-business users
Ep0,997
Ep0,36
Source Own estimation of the bases of Eurostat
data.
12
Linear regression of electricity demandby
households in Slovenia
Ep0.777
Ep0,025
Source Own estimation on the bases of Eurostat
data.
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Regression model of electricity demands by
households
Significant at 1. Significant at 5.
Source Own estimation
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Regression model of retail electricity marketing
margin
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Conclusions

• Price elasticity of electricity demand is
  inelastic
• Consumption of electricity is rising
• Supply of electrical energy is not sufficient
• Encouragement of energy efficiency
• Rising people awareness
• Higher electricity retail prices
• New investments in electricity production,
  especially renewable sources

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Thank you