Abstract

QUINTERO QUINTERO, María del Carmen  and  ISAZA CUERVO, Felipe. HYDROLOGICAL AND REGULATORY DEPENDENCE ON THE FORMATION OF THE ENERGY PRICE IN A HYDRO-DOMINATED ENERGY SYSTEM: COLOMBIAN ELECTRICAL SYSTEM CASE. Rev. ing. univ. Medellín [online]. 2013, vol.12, n.22, pp.85-96. ISSN 1692-3324.

This research presents a linear regression single-equation econometric model that represents the economic relationship between the electricity spot price and some fundamentals of the Colombian energy market, specifically hydro inflows, as it is a highly hydro-dominated system, and variables such as the system's generation availability index, bilateral long term contract prices, and the ratio between market's out of merit generation (positive reconciliation) and the actual real generation. The econometric model shows that hydro inflows as an explanatory variable is not sufficient to explain the spot price of electricity, and in consequence is necessary to use fundamentals as complementary explanatory variables. Results show besides hydro inflows, bilateral long term contract prices are positive and strong correlated with the spot price of electricity and acts as a significant explanatory variable, while hydro inflows and system's generation availability are negative correlated with the spot price of electricity. Finally the proposed model can be used for short and mid-term spot price forecasting in the Colombian energy market, in support of the decision making process of market agents. This article is a contribution to the scientific and technological research, and practically extends the applicability of econometric in finance.

Keywords : Electricity spot price; water inflows; single equation linear regression models.

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