Pricing structure in the deregulated UK electricity market

Evens Salies () and Catherine Waddams
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Catherine Waddams: University of East Anglia

Industrial Organization from EconWPA

Abstract: As residential energy markets open to competition, consumers can choose from a range of tariffs offered by different suppliers. We examine the relationship between the fixed charge levied on each consumer, and the variable charge per unit of energy used across all these tariffs. Data are the tariffs offered in April 2002 in the 14 electricity regions of Great Britain by seventeen suppliers, seven of whom operate nationally. Our analysis focuses on the revenue trade-off for the company. We identify the effect of payment method on the relationship between fixed and variable charge. We find significant effects of the distribution and transmission charges which the suppliers pay in each area, as well as the size of the market both by number of customers and area; and confirm that incumbents charge significantly more that entrants. We also find significant differences between the prepayment and credit tariffs.

Keywords: Energy Competition; Non Linear Pricing; Simultaneous Equation Models (search for similar items in EconPapers)
JEL-codes: L (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com and nep-eec
Date: 2004-06-05
Note: Type of Document - pdf; pages: 24
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Persistent link: http://EconPapers.repec.org/RePEc:wpa:wuwpio:0406002

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