Residential Electricity Pricing in Texas’s Competitive Retail Market

David Brown, Chen-Hao Tsai (), Chi-Keung Woo, Jay Zarnikau () and Shuangshuang Zhu ()
Additional contact information
Chen-Hao Tsai: Midcontinent Independent System Operator
Shuangshuang Zhu: Frontier Energy

No 2020-4, Working Papers from University of Alberta, Department of Economics

Abstract: Using a large sample of residential retail electricity plans advertised on the Public Utility Commission of Texas’s Power-to-Choose website between during January 2014 to December 2018, our panel regression analysis finds changes in the projected wholesale price of electricity are not fully reflected as changes in these plans’ price quotes. The estimated rates of wholesale price pass-through range from 43% to 45%. Retailers tend to charge risk premia that increase with wholesale price volatility. Prepayment and time-of-use plans likely 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 customer switching tends to reduce retail price quotes, implying that Texas’s residential retail market can be made more price competitive through consumer education on plan choices and dissemination of credible price information.

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)
Pages: 39 pages
Date: 2020-04-27
New Economics Papers: this item is included in nep-ene, nep-gen and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Journal Article: Residential electricity pricing in Texas's competitive retail market (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:ris:albaec:2020_004

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