Should Saskatchewan adopt retail competition for electricity?

Rushton turns his attention to the issue of retail competition in the electrical sector, and examines the costs and benefits associated with extending competition in the sector in Saskatchewan beyond the wholesale level to the retail level. [...] The costs of adopting retail competition include the set-up and operating costs of the required new regulatory and market institutions; the likely need to upgrade transmission links with other jurisdictions; the need to deal with what might be substantial stranded assets in the sector; potential noncompetitive pricing; and the loss of economies of scale from vertical integration. [...] The independence of the operator from the owners of the transmission grid is crucial, since generators will be unwilling to make investments without the knowledge that they will have certain and non-discriminatory access to the transmission grid (Arizu, Dunn and Tenebaum 2002). [...] Suppose there is a uniform-price auction: suppliers submit bids to the ISO for electricity supply during a particular time period, and the ISO orders the bids from lowest price to highest, selecting the number of firms, starting with the lowest bid, that will meet the anticipated demand, and paying all generation firms the price of the marginal supplier (the last firm chosen). [...] Where the monopoly was owned by the public sector, the redistribution is from the public treasury to consumers (putting to one side the issues of how the profits that arise from the monopoly position are in fact realized as general revenues and not as retained earnings by the Crown corporation).