Brattle economists have contributed two articles to the current issue of Energy Regulation Quarterly, a journal that provides a forum for debate and discussion on issues surrounding the regulated energy industries in Canada.
“Reforming Ontario’s Wholesale Electricity Market: The Costs and Benefits” provides a review of a recent report authored by Brattle economists examining the net benefit that Ontario could realize through implementation of a locational energy market, improving the system’s operating flexibility, and the introduction of an incremental capacity auction for maintaining resource adequacy. Prepared for the Independent Electricity System Operator (IESO), the report found that the estimated benefits of the “Market Renewal” initiative significantly outweigh estimated implementation costs, with a present value of net benefits ranging from $2.2 billion to $5.2 billion over the next decade. Based on these results, the IESO and its stakeholders have decided to proceed with developing a revised market design in a manner that will maximize available benefits, mitigate implementation risks, and prepare the province’s wholesale power market for meeting future customers’ needs while supporting public policy priorities. The article is authored by Brattle Principals Johannes Pfeifenberger, Kathleen Spees, and Judy Chang, Associate Walter Graf, and Senior Associate Mariko Geronimo Aydin.
Brattle Principals Ahmad Faruqui and Sanem Sergici authored the article, “Do Manufacturing Firms Relocate in Response to Rising Electric Rates?,” which investigates whether U.S. industrial manufacturing customers faced with rising electric rates relocate to lower-cost regions. Through examining the variations in industrial rates across the U.S., the Drs. Faruqui and Sergici find that industrial rates vary considerably across the U.S. and manufacturing firms do not relocate in response to rising electric rates. The authors expect similar conclusions to be drawn from a review of Canadian data as well.
For more information, please visit the Energy Regulation Quarterly website.