Pass-through in residential retail electricity competition: Evidence from Pennsylvania

Christina E. Simeone, Ian Lange and Ben Gilbert

Utilities Policy, 2023, vol. 80, issue C

Abstract: Public data for Pennsylvania show that competitive retail electricity generation suppliers (EGS) have offered higher-priced products to residential consumers compared to prices offered by regulated default electric distribution companies (EDCs). It is unclear if the EGSs higher prices are due solely to providing differentiated value-added products with higher input costs or if these suppliers are extracting higher markups. This study applies regression analysis to residential retail price data from Pennsylvania to explore this uncertainty. Results suggest EGSs pass-through markups on voluntary green-power product environmental attributes of at least 1.3x or greater, depending on the product type and penetration. These results do not support the hypothesis that higher EGS prices are solely the result of higher input costs and support the notion that higher prices are due in part to markups.

Keywords: Retail electricity competition; Cost pass-through; Renewable energy credits (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:juipol:v:80:y:2023:i:c:s0957178722001436

DOI: 10.1016/j.jup.2022.101479

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