Multivariate Analysis of Variance Applied to Competitive Electricity Markets: The Fixed Effects Model

Competitive electricity markets are based on a set of hypotheses which sustains a vertical and horizontal segmentation of the generation, transmission and distribution sectors in different functions. This theoretical model was implemented in several countries and its operation for more than a decade produced a great amount of data which are analyzed by the public authorities to take further decisions. Proposals regarding reforms for this type of markets must be based on a deep knowledge of different factors influence on the market parameters. Consequently, it is important to have methodologies and statistical techniques to help Public Authorities take decisions. In this paper, the application of the methodology of analysis of variance of multivariate data (MANOVA) to detect the impact of the fuel consumption on the market price is presented. A two factors fixed effect model is used; two-level factors for fuel-oil and two-level factors for natural gas. The random variable observed is a vector of twenty-four components which correspond to the 2005 market price in the Argentinean Electricity Market.