Electricity Market Reform in Norway

248 Pages·2000·26.114 MB·English

by  Eivind Magnus, Atle Midttun (eds.)

Electricity Market Reform in Norway
Also by Eivind Magnus
ECONOMIC INCENTIVES AND PUBLIC FIRM BEHAVIOR (with Eimar Hope and
Richard Matland)
AN INTERNATIONAL REVIEW OF INSTITUTIONAL REFORM IN THE
ELECTRICITY SECTOR (with Mark Davis)
MANAGING SOCIAL AND ENVIRONMENTAL OBLIGATIONS IN LIBERALIZED
MARKETS (with Mark Davis)
Also by Atle Midttun
APPROACHES TO AND DILEMMAS IN REGULATION (editor with Eirik Svindland)
EUROPEAN ELECTRICITY SYSTEMS IN TRANSITION: A Comparative Analysis
of Energy Forecasting in Western Europe and North America (editor)
THE POLITICS OF ELECTRICITY FORECASTING: A Comparative Study of
Energy Forecasting in Western Europe and North America (editor with
Thomas Baumgartner)
Electricity Market Reform
in Norway
Edited by
Eivind Magnus
Partner and Director
ECON Centre for Economic Analysis
Oslo
Norway
and
Atle Midttun
Professor
Norwegian School of Management
Sandvik a
Norway
pal grave
macmillan
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Contents
Preface vii
Acknowledgements viii
Notes on the Contributors ix
1 The Norwegian Model: Competitive Public Economy 1
Eivind Magnus and Atle Midttun
Part I Electricity Trade in Competitive Markets
2 From Public Service to Market Competition: Norwegian
Utilities' Adaptation to Market Reform 27
Atle Midttun
3 The Nordic Power Exchange: Nord Pool 52
Anders Houmoller
4 Competition and Market Power 80
Arve Halseth and Per Ingvar Olsen
5 Risk Management in the New Electricity Trade 100
Per Ingvar Olsen
Part II Grid Management under a Competitive Regime
6 Incentives for Efficiency in Grid Operations 121
Eivind Magnus
7 Efficiency and Cost in Distribution Companies 139
Jan Briiten and Eivind Magnus
8 Owner Attitudes and Public-company Behaviour
in a Restructured Electricity Sector 158
Eivind Magnus
Part III The Norwegian Model in a Nordic and
a European Context
9 Trade and Competition in the Nordic Context 177
Arve Halseth and Jan Arild Snoen
v
vi Contents
10 Structure and Strategy in the Nordic Power Market 196
Atle Midttun
Bibliography 235
Index 239
Preface
This book brings together research on the Norwegian electricity market
reform, one of the pioneering reforms in this sector in Europe. It pools
economic and organisational analysis undertaken on this sector at the
Norwegian School of Management and ECON Centre for Economic
Analysis under several research programmes sponsored by the
Norwegian Research Council and the Federation of Norwegian Energy
Utilities. Together, these studies shed light on most aspects of the
Norwegian reform.
We are grateful to the Norwegian Research Council for supporting
the publication of the book, which we hope will contribute towards
shedding light on the options available for the present de-regulation in
Europe.
Oslo EIVIND MAGNUS
ATLE MIDTTUN
vii
Acknowledgements
The editors and publishers wish to thank the following for permission
to reproduce copyright material: Elsevier Science, for model simula
tions; and Figures 4.1-4.3, from A. Halseth, 'Market Power in the
Nordic Electricity Market', Utilities Policy (1998).
viii
Notes on the Contributors
Jan Braten is senior economist at the ECON Centre for Economic
Analysis, a Norwegian research and consulting group. He has a Cand.
Oecon. degree from the Department of Economics (1994) and a BA
in Mathematics, Sociology and Philosophy (1981), both from the
University of Oslo. Since 1994 Braten has worked as an economist the
ECON, with electricity economics and market analysis. His main field
of work is monopoly regulations, regulatory reforms and efficiency
studies. His most recent publications are 'Transmission Pricing in
Norway', Utilities Policy, 3 (1997) and 'OPEC's Response to International
Climate Agreements', Environmental and Resource Economics, 12 (1998)
(with R. Eolombek).
Arve Halseth is senior economist and partner in the ECON Centre for
Economic Analysis. He has a Cand. Oecon. degree (Economics) from
the University of Oslo. Halseth started in ECON in 1991, primarily
working with analysis of the Nordic electricity market. His main field
of work has been market modelling and analysis, with special emphasis
on how the hydro and thermal electricity systems interact through the
Nordic power exchange. Halseth has more recently been involved in
studies of intermodal freight transportation and the Norwegian food
processing industry. His most recent publication is 'Market Power in the
Nordic Electricity Market', Utilities Policy, 7 (1998).
Anders Houmoller is Market Manager with Nord Pool in Denmark. He
has also worked in the airline and shipping industries.
Eivind Magnus is director and partner in ECON, Centre for Eco
nomic Analysis, a Norwegian research and consulting group. His main
publications include Upstream Profitability in Vietnam and Upstream
Profitability in Malaysia, both commissioned by the Norwegian Research
Council.
Atle Midttun is Professor at the Norwegian School of Management and
Co-Director of the Centre for Energy and Environment. His publications
include Approaches to, and Dilemmas in Regulation (with Eirik Svindland),
European Electricity Systems in Transition, Norway the Energy Nation:
Societal Interests and Company Strategies in Energy Intensive Industry (1995)
and The Politics of Energy Forecasting (1987).
ix