Brazilian experience in electricity auctions: Comparing outcomes from new and old energy auctions as well as the application of the hybrid Anglo-Dutch design Erik Eduardo Rego a,n , Virginia Parente b a Instituto de Eletrote´cnica e Energia da Universidade de S ~ ao Paulo, Rua Gomes de Carvalho, 1329, conj.52, CEP 04547-005, S ~ ao Paulo, Brazil b Instituto de Eletrote´cnica e Energia da Universidade de S ~ ao Paulo, Av. Prof. Luciano Gualberto, 1289, CEP 05508-900 S ~ ao Paulo, SP, Brazil. HIGHLIGHTS c We analyze the outcomes from the Brazilian old and new energy auctions. c We evaluate the Anglo-Dutch auction design. c Outcomes from both kind of auctions reveal that the prices are statistically similar. c One kind of auction increase competition and minimize Eletrobras’ market power. article info Article history: Received 6 July 2011 Accepted 12 December 2012 Available online 5 January 2013 Keywords: Anglo-Dutch energy auction Brazilian electricity market abstract Since 2004, the Government of Brazil (GoB) has acted as an intermediary between distribution and generator companies in the energy procurement sector. The GoB procures energy from generator companies through auctions of long-term energy contracts. After an auction, the winning generator companies sign contracts directly with distribution companies. In particular, the GoB runs two different auctions: one for energy from existing power plants (i.e., old energy) and another for energy from power plants that have not yet been built (i.e., new energy). This paper describes these auctions and compares the outcomes from the old and new energy auctions from 2004 to 2010 using final auction prices. The Brazilian case is particularly interesting, not only because energy is predominantly supplied by hydropower plants but also because new energy auctions reach prices below those for old energy. Therefore, it is likely that it is not necessary to run the two different energy auctions. As a secondary objective, this article analyze whether the Anglo-Dutch hybrid auction model is a better design for electricity procurement in Brazil. & 2012 Elsevier Ltd. All rights reserved. 1. Introduction Although the topic of Brazilian electricity procurement auc- tions is addressed in some articles, this study brings new information by analyzing the outcomes of auctions that have been already conducted. First, by comparing results from green field power plants (i.e., new energy), and energy from existing power plants (i.e., old energy) auctions, this paper will analyze and question if differentiation in purchasing electricity between new and old energy is still necessary, according to the Brazilian electricity market design. Second, this paper will analyze if the sealed-bid stage of the Anglo-Dutch hybrid auction achieves its goal to minimize the chances of collusion and therefore reduce the final auction price as much as possible. This article begins with a brief description about the two reforms of the Brazilian electrical industry, focusing on the electric power competitive auction design and the difference between old and new energy procurement auctions. Then this study presents a very brief description about the government-owned electrical company Eletrobras, which was a monopoly until the 1990s. Moreover, Eletrobras is still the largest Brazilian power generator enterprise and can act as a market leader in the old energy procurement auctions. Then this article analyzes and compares outcomes from both auctions with both graphical analysis and dummy variable regression analysis. This paper will perform an analysis of the results and effectiveness of the second stage of the Anglo-Dutch hybrid auction. Finally, some recommendations are Contents lists available at SciVerse ScienceDirect journal homepage: www.elsevier.com/locate/enpol Energy Policy 0301-4215/$ - see front matter & 2012 Elsevier Ltd. All rights reserved. http://dx.doi.org/10.1016/j.enpol.2012.12.042 n Corresponding author. Tel.: þ55 11 3848 5999; fax: þ55 11 3044 5400. E-mail addresses: erikrego@usp.br, erikrego@yahoo.com (E.E. Rego), vparente@iee.usp.br (V. Parente). Energy Policy 55 (2013) 511–520