Uniform Pricing or Pay-as-Bid Pricing: A Dilemma for California and Beyond

Peter Cramton, University of Maryland
Alfred E. Kahn, Cornell University
Robert H. Porter, Northwestern University
Richard D. Tabors, Tabors Caramanis & Associates

Abstract

Any belief that a shift from uniform to as-bid pricing would provide power purchasers substantial relief from soaring prices is simply mistaken. The immediate consequence of its introduction would be a radical change in bidding behavior that would introduce new inefficiencies, weaken competition in new generation, and impede expansion of capacity.