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Efficiency and consumer welfare under retail electricity deregulation: Analysis of Ohio's retail choice markets

Author

Listed:
  • Noah Dormady
  • William Welch
  • Yufan Ji
  • Stephanie Pedron
  • Abdollah Shafieezadeh
  • Alberto Lamadrid
  • Matthew Hoyt
  • Samantha Fox

Abstract

Many critical infrastructure services operate under either price regulation or deregulated systems. The grand policy experiment of deregulation has been heavily studied, but evaluations have been limited at the retail level where end‐user prices are often difficult to obtain. This paper presents an in‐depth look at the retail market for electricity in a retail deregulated, or restructured, market—Ohio. We build and introduce a comprehensive SQL database of every daily filed retail electricity offer over a 9‐year period of study, over two‐million records. We integrate this data with other external data sources and conduct a detailed descriptive analysis of market prices as observed by end consumers at the retail level. We find that the lion's share of “competitive” retail electricity choice offers are more costly to consumers than the utility's default service rate and have higher markups over the wholesale price, and we find that when prices exceed the default rate they do so by a considerably larger margin than when consumers observe savings. We also find that even well‐informed consumers are able to find a welfare‐improving rate relative to the default rate between only 43% and 59% of the time. We conclude with a discussion of implications and root economic causes of the efficiency and consumer welfare problems we observe. 许多关键基础设施服务要么在价格管制下运行,要么在“去管制”系统中运行。大量研究聚焦于去管制的大型政策实验,但在零售层面的评估却很有限,因为终端用户的价格通常难以获得。本文深度研究了俄亥俄州零售去管制或重组市场中的电力零售市场。我们建立并引入了一个综合SQL数据库,其中包含九年研究期间每日提交的所有零售电力报价;超过两百万条记录。我们将这些数据与其他外部数据源整合在一起,并对零售层面终端消费者观察到的市场价格进行详细的描述性分析。我们发现,比起公用事业的默认服务费率,大部分“竞争性”零售电力报价对消费者来说更为昂贵,并且比批发价格有更高的加价。我们还发现,当价格超过默认费率时,其幅度比消费者观察到的节省幅度要大得多。即使是消息灵通的消费者也只能在43%到59%的时间里找到相对于默认费率的福利改善费率。最后,我们讨论了研究启示,效率的根本经济原因、以及所观察到的消费者福利问题。 Muchos servicios de infraestructura críticos funcionan bajo regulación de precios o en sistemas desregulados. El gran experimento de política de desregulación ha sido ampliamente estudiado, pero las evaluaciones han sido limitadas en el nivel minorista, donde los precios para el usuario final suelen ser difíciles de obtener. Este documento presenta una mirada en profundidad al mercado minorista de electricidad en un mercado minorista desregulado o reestructurado, Ohio. Creamos e introducimos una base de datos SQL integral para cada oferta de electricidad minorista presentada diariamente durante un período de estudio de nueve años; más de dos millones de registros. Integramos estos datos con otras fuentes de datos externas y realizamos un análisis descriptivo detallado de los precios de mercado observados por los consumidores finales en el nivel minorista. Observamos que la mayor parte de las ofertas de electricidad minoristas “competitivas” son más costosas para los consumidores que la tarifa de servicio predeterminada de la empresa de servicios públicos y tienen márgenes más altos que el precio mayorista, y descubrimos que cuando los precios superan la tarifa predeterminada lo hacen por un margen considerablemente mayor que cuando los consumidores observan ahorros. También constatamos que incluso los consumidores bien informados son capaces de encontrar una tasa de mejora del bienestar en relación con la tasa de incumplimiento sólo entre el 43 y el 59 por ciento de las veces. Concluimos con un análisis de las implicaciones y las causas económicas fundamentales de los problemas de eficiencia y bienestar del consumidor que observamos.

Suggested Citation

  • Noah Dormady & William Welch & Yufan Ji & Stephanie Pedron & Abdollah Shafieezadeh & Alberto Lamadrid & Matthew Hoyt & Samantha Fox, 2025. "Efficiency and consumer welfare under retail electricity deregulation: Analysis of Ohio's retail choice markets," Journal of Critical Infrastructure Policy, John Wiley & Sons, vol. 6(1), January.
  • Handle: RePEc:wly:crtinf:v:6:y:2025:i:1:n:e12031
    DOI: 10.1002/jci3.12031
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