Divestiture of generation assets in the electricity pool of England and Wales: A computational approach to analyzing market power

The task of developing an adequate modeling approach to understanding strategic behavior in competitive electricity markets is still a major open research question. In this paper, we develop an based on computational modeling and simulation. We apply the new approach to analyzing the second round (1999) of capacity divestiture proposals, which the government and regulatory authorities in England and Wales required in order to improve the efficiency of the wholesale power market. In this context, we suggest that, for a second time, the level of market power may be underestimated and that although the proposed amount of divestiture is substantial, it may still be insufficient to avoid the need for further regulatory controls in the short term.