Challenges, improvements, and opportunities market with the liberalization of the residential electricity market

Thomasi, Virginia; Siluk, Julio Cezar M.; Rigo, Paula D.; Pappis, Cesar Augusto de O.

doi:10.1016/j.enpol.2024.114253

Cited by 3 publications

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

Dormady,

Welch,

et al. 2024

Journal of Critical Infrastructure Policy

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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.

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