Jevan smith-project

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Jevan smith-project

  1. 1. The Energy MarketBy Jevan Smith
  2. 2. Energy Market StructureCompetitive Energy MarketDeregulation vs. RegulationGovernment RegulationThe price of energyIncentives in the energy marketConclusionIntroduction
  3. 3. Before the 1990’s utilities controlled the entireelectricity market, they had what is called a verticallyintegrated monopoly…Vertically-integrated monopoly: Is when a companyexpands its business into areas that are at differentpoints on the same production path, such as when amanufacturer owns its supplier and/or distributor.In a regulated electricity market a single company isnormally referred to as a utilityEnergy Market Structure
  4. 4. Deregulated states allow a complete retailcompetition model for energyImproves efficiencyCompetition drives energy prices lower and lowerInnovations are madeCompetitive Energy Market
  5. 5. Deregulation vs. RegulationRegulated electricity market: “a single company, normallyreferred to as a utility, owns all the infrastructure – thephysical stuff that stores and distributes electricity, liketransformers, poles, and wires….”Deregulated electricity market: “while the utility still ownsall the infrastructure and is still responsible for distributingelectricity to your home, competing electricity providersare allowed to buy the electricity and sell it to youdirectly….”
  6. 6. Market failure: A situation where free markets fail toallocate resources efficiently.Negative externalities: consumers and or producersfail to take into account the effects of their actions ona third partyInequality: The gap between rich and poorGovernment Regulations
  7. 7. The price of energySupply and demand impact the price of energy as wellas government regulations, these in particular shapethe price of energyAs an example, a power plant is destroyed by a earthquake causing the price of energy to rise
  8. 8. Incentives: is something that motivates someone toperform an action.For example, pollution permits are incentives forfirms or individuals not to pollute.Incentives to use less powerIncentives in the energy market
  9. 9. We have discovered that the energy market is full ofrelevant information in relation to the microeconomicsubject. We coveredincentives, monopolies, governmentregulations, competition and much more…Thank you for your time and attentionConclusion
  10. 10. http://www.economicsonline.co.uk/Market_failures/Types_of_market_failure.htmlhttp://www.sparkenergy.com/blog/demystifying-deregulation/http://en.wikipedia.org/wiki/Incentivehttp://www.economicshelp.org/marketfailure/pollution-permits.htmlhttp://www.minneapolisfed.org/community_education/student/essay/topics/topic09.cfm?http://www.rwe.com/web/cms/en/403722/rwe/press-news/specials/energy-trading/how-the-electricity-price-is-determined/http://www.economicsonline.co.uk/Market_failures/Types_of_market_failure.htmlhttp://www.constellation.com/about-constellation/pages/competitive-energy-markets.aspxSources

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