Market Power in the Wholesale Electricity Spot Market in Alberta, Canada

This paper examines market power in the wholesale electricity spot market in the Canadian province of Alberta. The characteristics of electricity markets and the structure of the post-regulation industry suggest that there is the potential for the exercise of market power by electricity generators. Using data for the period from 1998 to 2002, I estimate a parameter indicating the degree of competitiveness in the market, and find it is consistent more with competition than with the exercise of market power. I conclude that the market design and industry restructuring have been successful in constraining the strategic behaviour of firms.