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ISET Economist Blog

A blog about economics in the South Caucasus.
Feb
08

Will Georgia Stay as a Net Importer of Electricity in 2013?

For the first time since 2007 Georgia is a net electricity importer. Last year the total electricity generated declined by 4% and a 1.3% increase in total internal demand was observed. What should we expect from 2013? The year started with a reduction of final electricity consumption tariffs by 3.5 tetris for those consuming less than 300 kWh of electricity. This change will definitely lead to a greater demand from households and businesses. How will Georgia meet this higher demand? Attracting investments for new generation capacities? As more than one y...
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Jan
31

Can Big Business Gain Access to Cheap Electricity?

Can Georgia stimulate investment in electricity intensive sectors by providing cheap electricity? To answer this question one has to first analyse the behavior of the wholesale electricity market during the past 3 years. According to the order of the Georgian Ministry of Energy on the “Electricity (Capacity) Market Rules”, a “Direct Customer” (or one who buys electricity wholesale) is someone who, for their own needs, consumes 7 million kWh of electricity per year (As this amount is approved with basic directions of the state policy in the Energy Sector)...
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Dec
05

The Energy Tariffs Debate: Stoking the Fire

The possibility of lowering electricity and gas tariffs has become one of the top discussion topics across the country in the last few weeks. Little wonder of the interest in this topic at the time when gas and electricity bills reach their annual peak in account of the increased use of electricity and gas during the winter period. Having thought for some time about the feasibility of reducing electricity and gas tariffs in the near future, one comes across three questions that need to be addressed before jumping to hasty and potentially regrettable deci...
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Recent Comments
Guest — Eric
Of the many great points in the blog, I chose this one to amplify: "Since they are paying in full, aren’t consumers entitled to a... Read More
Wednesday, 05 December 2012 10:10 PM
Guest — Inigo
Indeed Eric, customer service is the most obvious missing link. Let's look at the two issues you bring up.First, the point about t... Read More
Thursday, 06 December 2012 1:01 PM
Guest — Michael
I would be interested in learning what the reasons for the often low quality of the current are. Are these technical reasons? Econ... Read More
Thursday, 06 December 2012 9:09 PM
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Oct
19

Small Hydropower Plants: No Competition in a Competitive Marketplace

Economics suggests that competition in a market brings more welfare to a country. Anti-monopoly agencies exist to create policies that limit market dominance and achieve competition. There are, of course, cases when natural monopolies emerge (for example, railways – where no one would build a parallel line to an existing one) and the solution to prevent monopolies in such instances is to regulate the businesses or take them into state ownership. It is, however, difficult, but not impossible, to find an instance when a market is competitive, but where no ...
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Guest — Eric
I don't think this is about competition or lack thereof. The puzzle is that small HPPs are free to sell directly to customers, cut... Read More
Friday, 19 October 2012 6:06 PM
Guest — Irakli
That’s why only allowing trade (by law) is not enough. Even though they are allowed to trade and market is competitive we do not s... Read More
Friday, 19 October 2012 11:11 PM
Guest — Michael
Admittedly I don't know anything about electricity markets, but maybe what ESCO does is to pool the risk. For consumer the risk th... Read More
Friday, 19 October 2012 8:08 PM
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Oct
17

Georgia – Net Electricity Importer Again?

Several years ago the (now former) Georgian government started successful reforms in the electricity sector and was eagerly looking forward to future projects. The improvements made were evident. The rehabilitation of hydroelectric power plants (HPPs) and other structural reforms led to a gradual increase of hydro power generation and to the decrease of electricity imports and thermo power generation. From 2006 this helped Georgia to become a net exporter. By 2010 Georgia exported almost seven times more electricity (1524.3 GWh) than it imported (222.1 G...
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Guest — Rati
I've undergone a starting phase of depression until I reached paragraph 4. thanks for good post and expecially for its end.
Wednesday, 17 October 2012 3:03 PM
Guest — Michael
Maybe extensive construction had a (negative) impact on power generation. I suppose there are HPPs that have been rehabilitated, t... Read More
Wednesday, 17 October 2012 4:04 PM
Guest — Giorgi
Michael, there was not any announcement about such large rehabilitation in last couple years that could cause this. In the contra... Read More
Friday, 19 October 2012 2:02 PM
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Oct
05

Competition in the Georgian Retail Gasoline Market

No, nothing about the election here. Instead something about the Georgian retail gasoline market, which according to some is not so competitive. Case in point is this article on an opposition (soon government) leaning news outlet that alleges price fixing in the Georgian retail gasoline market. The article is based on a recent study by Transparency Georgia. A study with some interesting data, but apparently it was all too much for a clueless (or partisan) journalist. But let’s discuss the study itself. Transparency Georgia finds that: The reta...
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Guest — Eric
Leaving the poor "journalist" alone, I had a very similar impression of a previously published Transparency International report o... Read More
Saturday, 06 October 2012 10:10 AM
Guest — Matsatso
In favor of TI survey,I agree with the fact that "price transmission mechanism" seems to be really asymmetric in Georgia. View is ... Read More
Saturday, 06 October 2012 12:12 PM
Guest — Hans Gutbrod
Looking forward to TI's response! Have you asked them? Otherwise agree with your point that you need specialization for think tank... Read More
Sunday, 07 October 2012 12:12 AM
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