Decomposing changes in competition in the Dutch electricity market through the residual supply index

- We analyze how competition in the Dutch electricity market evolved over 2006-2011.
- Using hourly data, we apply a decomposition method based on the residual supply index (RSI).
- We analyze the contribution of market-integration events, firm-level events and demand events.
- Market-integration events and changes in residual demand had a large effect.
- Firm-level events only had a minor impact on the RSI.

We propose to assess the influence of a number of events on the degree of competition in the Dutch electricity wholesale market over the period 2006-2011 through a decomposition method based on the residual supply index. We distinguish regulatory market-integration events, firm-level events and changes in the level of residual demand. We conclude that market-integration measures to improve competition have been effective, but that changes in residual demand appear to have been equally important. Firm-level events have only had a minor impact on the intensity of competition.