Residential electricity pricing in Texas's competitive retail market

David Brown, C.H. Tsai, C.K. Woo, Jay Zarnikau () and S. Zhu

Energy Economics, 2020, vol. 92, issue C

Abstract: Using a large sample of residential retail electricity plans advertised on the Public Utility Commission of Texas's Power-to-Choose website between January 2014 to December 2018, we analyse how a retail price quote varies with its per MWh procurement cost forecast based on wholesale prices and other product attributes. Our panel regression analysis finds that a retail price quote partially passes through 43% to 47% of a wholesale price forecast changes and embodies a risk premium that increases with wholesale price forecast volatility. Prepayment and time-of-use plans contain price premia. The price premia associated with higher-than-average renewable energy contents in the early years of our sample have largely vanished by 2018. Longer contract terms come at a higher price. Finally, increased one-month lagged customer switching tends to be associated with reduced retail price quotes.

Keywords: Retail electricity pricing; Procurement cost pass-through; Risk premium; Renewable premium; ERCOT (search for similar items in EconPapers)
JEL-codes: D47 G12 Q31 Q41 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

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Working Paper: Residential Electricity Pricing in Texas’s Competitive Retail Market (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:92:y:2020:i:c:s0140988320302930

DOI: 10.1016/j.eneco.2020.104953

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