Despite all of the talk about “deregulation” of the electricity sector, a large number of non-market mechanisms have been imposed on emerging competitive wholesale and retail markets. These mechanisms include spot market price caps, operating reserve requirements, non-price rationing...

In order to preserve stability of electricity supply generators must provide ancillary services in addition to energy production. Hydroelectric resources have significant ancillary service capability because of their dynamic flexibility. This paper suggests a solution for optimal bidding for...

Constellation Energy has been a leading performer in the merchant power business since 2001. In addition to its legacy utility, Baltimore Gas and Electric, Constellation is a merchant generator and a wholesale power marketer serving the load of utilities as well as industrial, commercial and...

Using daily futures price data, I examine the behavior of natural gas and crude oil price volatility since 1990. I test whether there has been a significant trend in volatility, whether there was a short-term increase in volatility during the time of the Enron collapse, and whether natural gas...

We update the cost of nuclear power as calculated in the MIT (2003) Future of Nuclear Power study. Our main focus is on the changing cost of construction of new plants. The MIT (2003) study provided useful data on the cost of then recent builds in Japan and the Republic of Korea. We provide...

An arbitrage free multi-factor model is developed of the correlated forward curves of the crude oil, gasoline, heating oil and tanker shipping markets. Futures contracts trading on public exchanges are used as the primary underlying securities for the development of a multi-factor Gaussian...

In various fields of economic endeavor, agents enjoy the option to “try, try again.” Failure in a particular pursuit often brings renewed effort to finally succeed. Many areas of R&D could be characterized in this fashion. Our purpose is to define and measure the value of this option to try...

We thank the late David Bradford for initiating a conversation that motivated this paper. Our admiration for David’s brilliance as an economist was only exceeded by our admiration for him as a human being. We are grateful for the especially valuable criticisms from David Card and two anonymous...

Evidence from the U.S. and some other countries indicates that organized wholesale markets for electrical energy and operating reserves do not provide adequate incentives to stimulate the proper quantity or mix of generating capacity consistent with mandatory reliability criteria. A large part...

Sharp price fluctuations and increasing environmental and distributional concerns, among other issues, have led to a renewed academic interest in energy demand. In this paper we estimate, for the first time in Spain, an energy demand system with household microdata. In doing so, we tackle...