PRESERVING ELECTRICITY MARKET EFFICIENCY WHILE CLOSING IRELAND’S CAPACITY GAP. Quarterly Economic Commentary, Autumn 2007

Lyons, Sean and Fitz Gerald, John and McCarthy, Niamh and Valeri, Laura Malaguzzi and Tol, Richard S.J. (2007) PRESERVING ELECTRICITY MARKET EFFICIENCY WHILE CLOSING IRELAND’S CAPACITY GAP. Quarterly Economic Commentary, Autumn 2007. [Working Paper]

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Abstract

The public perception of electricity regulation focuses on price outcomes: are prices low or high, rising or falling, stable or volatile. However, the quantity and quality dimensions of electricity services also have important effects on societal welfare. Although electricity is essentially a homogeneous good, the services that deliver it may be differentiated in ways that are significant to users; in particular, by the reliability standard they deliver.1 Ideally, we should choose the set of market arrangements that will deliver, both now and in the future, the preferred quantity and quality of electricity services at prices that are as low as possible.

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