Search

In this paper, we study the relationship between reconciliations in the Colombian electricity market and the bid prices by firms on the spot market. In this work, we propose a model of behavior of the firm to elaborate theoretical predictions about the relationship between the reconciliations and the bid prices. Subsequently, we developed an empirical strategy to test the predictions of our model. We find that when firms expect their units to have negative reconciliations the next day, they tend to reduce the bid prices for their units. To positive reconciliations, there is no evidence of any relationship. [ABSTRACT FROM AUTHOR]

In this paper, we elaborate a theoretical model to explain how generating firms choose their aggregate position in bilateral contracts in the Colombian electricity market. Subsequently, we propose an empirical strategy to contrast the theoretical predictions of the model with data from the wholesale market. Our results show that there is evidence in favor of the hypotheses of our model. Firms tend to adjust their contracts according to the ideal generation they expect the market operator to allocate them, and the difference between marginal costs and contract prices. [ABSTRACT FROM AUTHOR]