Abstract

Shmuel,

This is the abstract for my presentation on the 23rd of October.
I am in London and Paris this week. I can be reached at my
private E-mail address vkaminski@aol.com.

Please, feel free to suggest modifications to the abstract.

Vince

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< The last three years were characterized by exceptionally high volatility of
< the power prices in the US markets. The market developments have created a
< number of unique challenges for energy industry economists. One immediate
< question we have to answer is how to measure volatility of energy prices.
< Although we can all agree that the prices in the power markets are
< characterized by high variability, the traditional measures used in
financial
< economics (annualized standard deviation of log price returns) may not fit
< well electricity prices. The second challenge is to explain the sources of
< high price volatility and to answer the question to what extent it can be
< attributed to problems that can be addressed in the long run. Such problems
< include flaws in market design that allow some market participants to abuse
< market power, limited availability and/or unequal access to transmission,
< temporary shortages of generation capacity. Some factors underlying high
< volatility of electricity prices may be of permanent nature and may be a
< necessary price to pay for increased market efficiency and expanded customer
< choice.