2. Energy Market Structure
Competitive Energy Market
Deregulation vs. Regulation
Government Regulation
The price of energy
Incentives in the energy market
Conclusion
Introduction
3. Before the 1990’s utilities controlled the entire
electricity market, they had what is called a vertically
integrated monopoly…
Vertically-integrated monopoly: Is when a company
expands its business into areas that are at different
points on the same production path, such as when a
manufacturer owns its supplier and/or distributor.
In a regulated electricity market a single company is
normally referred to as a utility
Energy Market Structure
4. Deregulated states allow a complete retail
competition model for energy
Improves efficiency
Competition drives energy prices lower and lower
Innovations are made
Competitive Energy Market
5. Deregulation vs. Regulation
Regulated electricity market: “a single company, normally
referred to as a utility, owns all the infrastructure – the
physical stuff that stores and distributes electricity, like
transformers, poles, and wires….”
Deregulated electricity market: “while the utility still owns
all the infrastructure and is still responsible for distributing
electricity to your home, competing electricity providers
are allowed to buy the electricity and sell it to you
directly….”
6. Market failure: A situation where free markets fail to
allocate resources efficiently.
Negative externalities: consumers and or producers
fail to take into account the effects of their actions on
a third party
Inequality: The gap between rich and poor
Government Regulations
7. The price of energy
Supply and demand impact the price of energy as well
as government regulations, these in particular shape
the price of energy
As an example, a power plant is destroyed by a earth
quake causing the price of energy to rise
8. Incentives: is something that motivates someone to
perform an action.
For example, pollution permits are incentives for
firms or individuals not to pollute.
Incentives to use less power
Incentives in the energy market
9. We have discovered that the energy market is full of
relevant information in relation to the microeconomic
subject. We covered
incentives, monopolies, government
regulations, competition and much more…
Thank you for your time and attention
Conclusion
