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The prospects for smart energy prices: observations from 50 years of residential pricing for fixed line telecoms and electricity

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  • Musiliu O. Oseni

    (Energy Policy Research Group, Judge Business School, University of Cambridge)

  • Michael G. Pollitt

    (Energy Policy Research Group, Judge Business School, University of Cambridge)

Abstract

This study focuses on how energy and communications have evolved over the last 50 years and what we can learn from history in order to examine the prospects for smart energy pricing by 2050. We begin by discussing the nature of energy and telecoms products and why price discrimination should be expected. We then review various business and pricing strategies that have evolved in the two industries. We find that business models for both the telecoms and energy sectors have changed from the traditional services business model (i.e., offering of calls and messages for telecoms, and utility supply services for energy) to more dynamic, integrated and complex business models. These new business models include the managed services provider model, the bundled services model, and the prosumer business model, among others. Similarly, several changes in pricing structure have evolved. There has been a reduction in the number of distanced-based and increasing time-based price differentiation in fixed line telecoms and the abolition of residential floor area-based differentiation in electricity pricing. We conclude with a discussion on how the rollout of the next generation of electricity meters (smart and advanced meters) may further shape electricity pricing in the future.
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Suggested Citation

  • Musiliu O. Oseni & Michael G. Pollitt, 2016. "The prospects for smart energy prices: observations from 50 years of residential pricing for fixed line telecoms and electricity," Working Papers EPRG 1611, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    • Handle: RePEc:enp:wpaper:eprg1611
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    References listed on IDEAS

    as
    1. Olla, Phillip & Patel, Nandish V., 0. "A value chain model for mobile data service providers," Telecommunications Policy, Elsevier, vol. 26(9-10), pages 551-571, October.
    2. Musiliu O Oseni & Michael G Pollitt & David M Reiner & Laura-Lucia Richter & Kong Chyong, 2013. "2013 EPRG Public Opinion Survey: Smart Energy – Attitudes and Behaviours," Working Papers EPRG 1327, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
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    5. Musiliu 0. Oseni & Michael G. Poilitt & David M. Retner & Laura-Lucia Richter & Kong Chyong, 2013. "2013 EPRG Public Opinion Survey: Smart Energy Survey — Attitudes and Behaviours," Cambridge Working Papers in Economics 1352, Faculty of Economics, University of Cambridge.
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    Cited by:

    1. Wang, Chen & Zhou, Kaile & Yang, Shanlin, 2017. "A review of residential tiered electricity pricing in China," Renewable and Sustainable Energy Reviews, Elsevier, vol. 79(C), pages 533-543.
    2. Clement Karani Mbore & Jane Sang & Joyce Komen, 2019. "Management control system, organizational processes and institutional performance of technical training institutions in Kenya," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 8(6), pages 229-239, October.
    3. Fuentes, Rolando & Blazquez, Jorge & Adjali, Iqbal, 2019. "From vertical to horizontal unbundling: A downstream electricity reliability insurance business model," Energy Policy, Elsevier, vol. 129(C), pages 796-804.
    4. Michael G. Pollitt, 2016. "Electricity Network Charging for Flexibility," Working Papers EPRG 1623, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    5. Aleksei A. Shulus & Svetlana M. Doguchaeva & Gurgen L. Gukasyan & Aleksandr V. Bobkov & Valeriy I. Prasolov, 2019. "Management of the Energy Business in the Countries with Developing Economies in the Conditions of the Integration Processes," International Journal of Energy Economics and Policy, Econjournals, vol. 9(5), pages 74-87.
    6. L. (Lisa B.) Ryan & Sarah La Monaca & Linda Mastrandrea & Petr Spodniak, 2018. "Harnessing electricity retail tariffs to support climate change policy," Open Access publications 10197/9911, School of Economics, University College Dublin.
    7. Xu, Bin & Lin, Boqiang, 2018. "Do we really understand the development of China's new energy industry?," Energy Economics, Elsevier, vol. 74(C), pages 733-745.
    8. Mukherjee, Maitreyee & Jensen, Olivia, 2022. "Open Water: Impacts of Retail Competition on Service Performance and Water-Use Efficiency in England," Utilities Policy, Elsevier, vol. 79(C).

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    More about this item

    Keywords

    smart pricing; business models; telecoms; energy; residential; UK;
    All these keywords.

    JEL classification:

    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications

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