Date: 2014
Type: Article
Forum shopping for ex-post gas-balancing services
Energy policy, 2014, Vol. 67, pp. 209–221[Florence School of Regulation], [Gas]
KEYAERTS, Nico, D'HAESELEER, William, Forum shopping for ex-post gas-balancing services, Energy policy, 2014, Vol. 67, pp. 209–221[Florence School of Regulation], [Gas] - https://hdl.handle.net/1814/39467
Retrieved from Cadmus, EUI Research Repository
The patchwork of different imbalance-settlement rules in geographically adjacent gas regions induces shippers to go “forum shopping” to minimize costs of ex-post balancing services. This shopping increases efficiency, and thus welfare of the shippers, on the one hand. The impact on net efficiency is dependent on the relative incentives provided by different balancing mechanisms and the relative system-balancing costs that the transmission-system operators face to offer balancing services to unbalanced shippers, on the other hand. If the gas-balancing mechanism and the system-balancing costs are aligned, net efficiency in the combined gas system will rise. Our results demonstrate that such an outcome is not guaranteed. Hence, market integration without properly checking compatibility of balancing rules can improve shipper efficiency at the cost of reducing overall efficiency. The latter outcome should clearly be avoided by policy makers and European regulators whose primary concern should be overall efficiency as this provides fair and efficient prices for gas consumers and a higher utility for society.
Cadmus permanent link: https://hdl.handle.net/1814/39467
Full-text via DOI: 10.1016/j.enpol.2013.11.062
ISSN: 0301-4215
Series/Number: [Florence School of Regulation]; [Gas]
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