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Will Electricity Market Reform Likely Reduce Retail Rates?

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  • Woo, C.K.
  • Zarnikau, Jay

Abstract

To win public support, proponents for electricity market reform to introduce competition often promise that the post-reform retail rates will be lower than the average embedded cost rates that would have prevailed under the status quo of a regulated monopoly. A simple economic analysis shows that such a promise is unlikely to occur without the critical assumption that the post-reform market has marginal costs below average costs.

Suggested Citation

  • Woo, C.K. & Zarnikau, Jay, 2009. "Will Electricity Market Reform Likely Reduce Retail Rates?," The Electricity Journal, Elsevier, vol. 22(2), pages 40-45, March.
    • Handle: RePEc:eee:jelect:v:22:y:2009:i:2:p:40-45
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    Cited by:

    1. Hartley, Peter R. & Medlock, Kenneth B. & Jankovska, Olivera, 2019. "Electricity reform and retail pricing in Texas," Energy Economics, Elsevier, vol. 80(C), pages 1-11.
    2. Noah Dormady & Matthew Hoyt & Alfredo Roa-Henriquez & William Welch, 2019. "Who Pays for Retail Electric Deregulation? Evidence of Cross-Subsidization from Complete Bill Data," The Energy Journal, , vol. 40(2), pages 161-194, March.
    3. Simone Di Leo & Marta Chicca & Cinzia Daraio & Andrea Guerrini & Stefano Scarcella, 2022. "A Framework for the Analysis of the Sustainability of the Energy Retail Market," Sustainability, MDPI, vol. 14(12), pages 1-28, June.
    4. Swadley, Adam & Yücel, Mine, 2011. "Did residential electricity rates fall after retail competition? A dynamic panel analysis," Energy Policy, Elsevier, vol. 39(12), pages 7702-7711.
    5. Kaller, Alexander & Bielen, Samantha & Marneffe, Wim, 2018. "The impact of regulatory quality and corruption on residential electricity prices in the context of electricity market reforms," Energy Policy, Elsevier, vol. 123(C), pages 514-524.
    6. Alexander Hill, 2023. "Price freezes and gas pass-through: an estimation of the price impact of electricity market restructuring," Journal of Regulatory Economics, Springer, vol. 63(1), pages 87-116, April.
    7. Zarnikau, J. & Cao, K.H. & Qi, H.S. & Woo, C.K., 2023. "Has retail competition reduced residential electricity prices in Texas?," Utilities Policy, Elsevier, vol. 84(C).

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