Should we reconsider competition in residential electricity supply? Survey results in North Carolina

Tanga McDaniel and Peter Groothuis

No 11-04, Working Papers from Department of Economics, Appalachian State University

Abstract: Retail competition has been introduced in many states as part of electricity industry deregulation. Following problems in the electricity market in California in 2000/01 many states, including NC, put deregulation plans on hold. Where retail competition is allowed consumers can choose their electricity supplier, and companies can compete for customers on the basis of rates and/or other options such as green energy choices. The welfare benefits of retail competition depend on consumers’ willingness to switch suppliers, and in many cases people choose to stay with their current supplier even though rivals offer savings. In that sense consumers are ‘sticky’ in the same way they are with other services such as banking and credit. The question then becomes: should states reconsider retail competition or stay with the status quo? To help answer this question we survey residents in two North Carolina counties. Our survey focuses on: (i) households’ knowledge of and interest in retail competition (ii) factors that would encourage them to switch suppliers, with an emphasis on smart meters and (iii) how large the potential savings would have to be to encourage switching. Key Words: electricity supply, retail competition, switching

Date: 2011
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Persistent link: https://EconPapers.repec.org/RePEc:apl:wpaper:11-04

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