Issue 21 November 2006
In this issue are the following articles:
Making a case for dynamic electricity pricing
California has an energy problem: one quarter of its electricity-generating capacity is used for fewer than 100 hours each year. This capacity sits idle for all but the hottest days of summer, when air conditioning drives peak loads. And each year the costly peaks grow higher - partly because most Californians, who pay a flat rate for their electricity, have no financial incentive to shift their electricity use away from these peaks. This may be changing, however. Matt Burgess plugs into dynamic electricity pricing.
Author:
Matt Burgess
Going once! Going twice! Extended! Online auction rules and bidder behaviour
Websites such as Trade Me and eBay allow users to buy and sell goods via online auctions. But they have different rules for dealing with late bids. Do such differences matter for the bidder behaviour and auction outcomes - and, if so, why? Rene Le Prou investigates.
Author:
Rene Le Prou
Taking it from the top
ISCR chair Richard Bentley gives his perspective on what ISCR is all about.
Author:
Richard Bentley
CAPM skating on thin ice
Practical applications of the celebrated Capital Asset Pricing Model (CAPM) typically employ a prior and independent estimate of the market risk premium (MRP). But as Glenn Boyle explains, the CAPM itself places an exact restriction on the allowable MRP, an insight that has intriguing implications for the cost of capital estimates.
Reserve generation: swimming against the current?
During the winters of 2001 and 2003, low water-levels in New Zealand's key hydro lakes created the prospect of insufficient electricity-generation capacity - and electricity blackouts. At the same time, the spot market for electricity experienced high price volatility. While a range of voluntary consumption-reduction measures helped avert compulsory blackouts and brought down spot-market prices in both years, the government decided to try to forestall a repeat of these episodes by creating an Electricity Commission whose main role was to ensure security of supply by maintaining dry-year reserve-generation capacity. Three years on, Seamus Hogan evaluates the thinking behind this.
Author:
Seamus Hogan
Loose wires in the LLU debate
In early May, following a Ministry of Economic Development (MED) stocktake of the New Zealand telecommunications sector, the government announced Telecom would henceforth be required to lease local-loop access on request to any new entrant, at prices to be set by the Telecommunications Commissioner. Bronwyn Howell assesses the evidence.
Continuous disclosure at NZX: more evidence
In the last issue of Competition & Regulation Times, Gerry Gallery considered the impact of the New Zealand Exchange's (NZX's) continuous-disclosure listing rules on the accuracy of management-earnings forecasts. Now Alastair Marsden and Russell Poskitt pick up the pace. They assess the effect of these rules on both the accuracy of analyst forecasts and the efficiency with which the stockmarket processes information.
Authors:
Alastair Marsden, Russell Poskitt
Full speed ahead...or proceed with caution? Investing in the national grid
It is debatable whether or not the Ministry of Energy recently exercised an abandonment option on the Electricity Commission chairman's tenure. But life is uncertain, which makes options like these valuable. As Glenn Boyle and Richard Meade point out, when upgrades of New Zealand's electricity transmission grid are being planned it's important to consider how an uncertain future affects current investment choices.
