The benefits of purely financial participants for wholesale and retail market performance: lessons for long-term resource adequacy mechanism design
研究新加坡电力期货市场发现，期货合约量增加会降低零售和批发价格，支持引入纯金融参与者改善市场绩效，并探讨了将标准化期货市场作为长期资源充足机制的设计。
In April 2015, Singapore introduced an anonymous futures market for wholesale electricity. Using data on prices and other observable characteristics of all competitive retail contracts signed from October 2014 to March 2016, a larger average quantity of open futures contracts that clear during the term of the retail contract a month before the retail contract starts delivery predicts a lower price for the retail contract. This outcome is consistent with increased futures market purchases by independent retailers causing lower retail prices. Consistent with the logic in Wolak (2000) that a larger volume of fixed-price forward contract obligations leads to offer prices closer to the supplier’s marginal cost of production, a larger volume of futures contracts clearing against short-term wholesale prices predicts lower half-hourly wholesale prices. Both empirical results support introducing purely financial players to improve both retail and wholesale market performance. The paper then outlines how a regulator-mandated standardized futures market can be used as a long-term resource adequacy mechanism for the wholesale market regime.