Mechanisms Employed to Monitor Market Power in Electricity Markets in Colombia

By Jesús Alonso Botero & John J. Garcia (Universidad EAFIT); Luis Guillermo Vélez Sr. (University of Paris X)

This paper investigates the viability of using the Residual Supply Index (RSI) to promote market competition in the Colombian electrical pool. The evaluation is based on a literature review of international experiences of power market monitoring mechanisms and an analysis of CREG Document No. 118 produced by the Colombian Commission for the Regulation of Energy and Gas (CREG). The principal conclusions of the review are that the RSI is not a good control mechanism in hydric markets, and that international evidence shows that the development of long-run markets has been used very successfully to mitigate the risk of market power abuse.

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