COSTOS DE GENERACIÓN, INVERSIÓN Y PRECIOS DEL SECTOR ELÉCTRICO EN MÉXICO

Enriquez, Alejandra and Ramirez, Jose Carlos and Rosellon, Juan (2019): COSTOS DE GENERACIÓN, INVERSIÓN Y PRECIOS DEL SECTOR ELÉCTRICO EN MÉXICO. Published in: Investigación Económica , Vol. 38, No. 709 (July 2019): pp. 58-79.

Abstract

Electricity prices have seen a consistent upward trend since the implementation of Mexico's electricity market reform (RME). This has been interpreted by some as a failure of the RME. In this paper we study the determinants of such price increases. We calculate the generation cost curve of the Federal Electricity Commission prior to the entry into force of the reform. We then construct daily data on average prices during the REM. We also finally study the relationship between prices and transmission congestion rents. Our main results indicate that the most profitable types of generation technology are the ones resulting from the RME. Likewise, price increases have taken place despite the existence of a considerably larger number of competitors in the generation sector. Lastly, the strong correlation between prices and congestion revenues is evidence that the increase in prices under the RME is mainly due to the growing congestion in the national electricity transmission network rather than due to an inefficient competitive market design in the generation sector.

• Item Type: MPRA Paper
• English Title: GENERATION COSTS, INVESTMENT AND PRICES IN THE ELECTRICITY SECTOR IN MEXICO
• Language: Spanish
• Keywords: Electric reform, electric generation, congestion rents, nodal prices, Mexico.
• Subjects: D - Microeconomics > D2 - Production and Organizations > D21 - Firm Behavior: Theory; D - Microeconomics > D4 - Market Structure, Pricing, and Design; D - Microeconomics > D4 - Market Structure, Pricing, and Design > D47 - Market Design; L - Industrial Organization > L5 - Regulation and Industrial Policy > L50 - General; L - Industrial Organization > L5 - Regulation and Industrial Policy > L51 - Economics of Regulation; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q4 - Energy > Q41 - Demand and Supply ; Prices

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