Wholesale price prediction: The role of information and transparency

The extent of real-time information disclosure in electricity markets has been a longstanding debate. Regulators have the difficult task of striking a careful balance between transparency to improve market outcomes under uncertainty while limiting the potential for coordinated action. We consider the case of Alberta’s electricity market where, until 2017, firms observed anonymized price-quantity offers in the wholesale market in near-real-time. We empirically evaluate the role that this information played in improving firms’ abilities to forecast wholesale prices, a key argument raised by stakeholders for this information to be published. While we find that this information improved firms’ abilities to forecast wholesale prices under certain market conditions, we present evidence to suggest that the economic significance of this improvement is minimal. We point to other types of near-real-time information that could help improve expectations of future market outcomes and provide suggestions on information disclosure policies that aim to strike a balance in motivating efficient outcomes, while reducing the risk of coordination. • We investigate the role of data transparency in improving wholesale electricity price forecasts. • Our paper is motivated by the trade-off between information disclosure and its effect on efficiency versus risks of coordinated behavior. • Our results suggest that the release of near real-time offer behavior improves price forecasts, but has small economic effects on operational decisions. • Our results point to the release of market-level information to promote market efficiency without the associated competition policy risks.