The influence of economic, financial and political indicators in South East Asian electricity markets

Abstract

Dynamic models of electricity pricing in South East Asian countries are studied in this chapter. The motivation is to attempt to explain the extent of regulation in South East Asian electricity markets using political, economic and financial indicators as reflected in risk ratings and energy stock market sectoral data. Electricity market models in China, Thailand and the Philippines show evidence of cointegration, implying relative market efficiency and deregulation in those countries in the long-term. Those in Malaysia and Hong Kong are not cointegrated implying that electricity pricing in those countries has little to do with domestic and international financial, economic factors over the long-term. This in turn indicates significant government pricing interference in the case of Malaysia and domestic share market influences in the case of Hong Kong. In their demonstration of long-run equilibrium and short-run exogeneity effects, the specified models of can be useful in studies of electricity market deregulation. The results may be useful as a starting point to analyse long-term and short-term electricity pricing policy.