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Types of Analysis to Determine Extent of Market Power and Opportunities for Gaming

  1. Examine market structure with respect to ownership to determine the level of market concentration and degree of competitiveness overall.
  1. Examine each owner’s plant portfolio to determine availability, marginal costs, and flexibility characteristics with respect to technical and contractual constraints.
  1. Examine supply stack in different periods to determine the shape of the bid function and which plants are likely to set the price in which time periods.

  1. Examine demand (load) to determine demand effects on price. Initial analysis shows that there is little relationship between demand and price because of the predominance of hydro-generation.
  1. Examine price behaviour to determine drivers of price. Why do prices behave so differently from day to day in some months?
  1. Examine the contract market and the effects on trading activity in the pool.
  1. Examine must-runs and other constraints as they have great influence on setting price.
  1. For hydro-dominated pools, understand hydro water value calculation to gain insight into the relationship between available capacity and marginal cost of hydro-generation as well as bidding strategies.
  1. Understand the details of pool rules to find loop holes for gaming.
  1. Keep up to date on regulatory changes and privatisation initiatives as these would affect the market participants.
  1. Perform the above analysis for data to see if the price behaviour (steep spikes, high volatility) seen in the first year continues.
  1. Compare with neighbouring countries for regional influence.