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Rent Taxes on Norwegian Hydropower Generation

Eirik S. Amundsen, Christian Andersen, Jan Gaute Sannarnes

Year: 1992
Volume: Volume 13
Number: Number 1
DOI: 10.5547/ISSN0195-6574-EJ-Vol13-No1-6
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Abstract:
In Norway, two obstacles to the introduction of a hydro rent tax are about to vanish, the old accounting system for public utilities and the system of administered non-rent prices. The tax authorities are now searching for a viable rent tax system. In this paper we consider detailed effects of six tax systems on realistically modelled marginal and highly profitable power plants. In addition to the existing "percentage system" we examine the ordinary corporate tax system, a special electricity income tax, a higher rate of proportional income tax, an excise tax and a resource rent tax. These systems are compared and evaluated with respect to neutrality, sensitivity to the amount of economic rent generated in a plant, cost-consciousness, stability of tax rates, stability of taxes paid, uncertainty of tax revenues and administrative costs. We conclude that the existing Norwegian tax system for electricity generation is not suited for taxing hydro rent since it seriously violates several of these criteria. The existing system ought to be replaced by a resource rent tax either as a pure system or in combination with a corporate income tax system.



Will Cross-Ownership Re-Establish Market Power in the Nordic Power Market?

Eirik S. Amundsen and Lars Bergman

Year: 2002
Volume: Volume23
Number: Number 2
DOI: 10.5547/ISSN0195-6574-EJ-Vol23-No2-3
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Abstract:
The integration of the power markets in Norway and Sweden in 1996 significantly constrained the major power companies' ability to exercise market power within their national borders. In recent years, however, mergers and reciprocal acquisition of shares have reduced the number of independent players on the Norwegian-Swedish power market. The aim of this paper is to explore to what extent increasing cross-ownership among the major power companies in Norway and Sweden might re-establish the market power that was lost when the two national power markets were integrated. The analysis is based on a numerical model, assuming Cournot quantity setting behavior, of the Norwegian-Swedish power market. The simulation results suggest that partial ownership relations between generators tend to increase horizontal market power and thus the market price of electricity.



The Nordic Market: Signs of Stress?

Nils-Henrik M. von der Fehr, Eirik S. Amundsen and Lars Bergman

Year: 2005
Volume: Volume 26
Number: Special Issue
DOI: 10.5547/ISSN0195-6574-EJ-Vol26-NoSI-4
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Abstract:
The supply shock that hit the Nordic electricity market in 2002-2003 put the market to a severe test. A sharp reduction in inflow to hydro reservoirs during the normally wet months of late autumn pushed electricity prices to unprecedented levels. We take this event as the starting point for analysing some potential weaknesses of the Nordic market. We conclude that fears regarding supply security and adequacy are likely to be unfounded. Nevertheless, as inherited over-capacity is eroded, and new market-based environmental regulation takes effect, tighter market conditions are to be expected. It is then crucial that retail markets are fully developed so as to allow consumers to adequately protect themselves from occurrences of price spikes.



Green Certificates and Market Power on the Nordic Power Market

Eirik S. Amundsen and Lars Bergman

Year: 2012
Volume: Volume 33
Number: Number 2
DOI: 10.5547/01956574.33.2.5
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Abstract:
The purpose of this study is to elucidate under which circumstances, how, and to what extent market power on a Tradable Green Certificates (TGC) market can be used to affect an entire electricity market. There are basically two reasons for being concerned with this. One is that a small number of companies may have exclusive access to first rate sites for wind power generation. The other is that withdrawal of a small number of TGCs implies a multiple reduction of electricity consumption, with corresponding increases of end user prices. We formulate both an analytical model to investigate economic principles and a numerical model based on that to investigate the Swedish TGC market operating in a setting of a common Nordic electricity market. The analysis shows that Swedish producers may exercise market power using the TGC-market but that this problem will be eliminated by opening the TGC-market for other Nordic countries. Keywords: Renewable energy, Electricity, Green certificates, Market power, Nordic power market



Simultaneous use of black, green, and white certificate systems

Eirik S. Amundsen and Torstein Bye

Year: 2018
Volume: Volume 39
Number: Number 4
DOI: 10.5547/01956574.39.4.eamu
View Abstract

Abstract:
We formulate a long run model with black, green and white certificate markets that function in conjunction with an electricity market. The markets function well together in the sense that a common equilibrium solution exists, where all targets are satisfied (e.g., the share of green electricity and share of energy saving/ efficiency increase). The equilibrium solution adapts to changing targets but it is, in general, impossible to tell whether this will lead to more, less, or unchanged consumption of "black," "green" or "white" electricity. Hence, if the long run target is to expand the capacity of green electricity generation and energy savings to certain given levels, then these markets may not be the best to use. To obtain clear results, specific parameter values and functional forms are needed. An example based on Norwegian data is provided. In addition, gains and losses in terms of consumers' and producers' surpluses are calculated.





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