Daglish, Tobyde Braganca, GabrielOwen, SallyRomano, Teresa2015-03-052022-07-072015-03-052022-07-0720152015https://ir.wgtn.ac.nz/handle/123456789/19257We examine electricity market reform in Brazil: from the 1990s till 2004 the largely hydro-powered market cleared using a market mechanism, and in March 2004 reformed to a single buyer structure. We model day-ahead returns using a Two-State Markov Switching Model with dummy variable analysis, allowing water storage and natural inflows to affect returns and volatility. Our results indicate the single buyer structure decreased volatility during stable periods but worsened energy crises. Post-reform, we find a more forgiving environment for the allocation of stored energy given natural water inflows, however sub-optimal water management leads to energy crises developing.pdfen-NZPermission to publish research outputs of the New Zealand Institute for the Study of Competition and Regulation has been granted to the Victoria University of Wellington Library. Refer to the permission letter in record: https://ir.wgtn.ac.nz/handle/123456789/18870Electricty marketsSingle buyerMarkov switchingBrazilText