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Why We Need Electricity Retailers: A Reply to Joskow on Wholesale Spot Price pass-through

Author

Listed:
  • Littlechild, S.C.

Abstract

Joskow, P. and others propose that, with the opening of retail electricity markets, distribution utilities should be required to enable residential customers to buy at (averaged) wholesale spot market prices. They argue that retail electricity competitors should concentrate on value-added services rather than price competition. However, they have not acknowledged the importance of retail price competition, neglected the role of contract markets, and underestimated the costs and disadvantages of this proposed obligation. Recent experience in San Diego illustrates some of the problems. An alternative policy of maximum caps has been adopted in the UK that is facilitating a transition to a competitive regulated residential retail market.

Suggested Citation

  • Littlechild, S.C., 2000. "Why We Need Electricity Retailers: A Reply to Joskow on Wholesale Spot Price pass-through," Cambridge Working Papers in Economics 0008, Faculty of Economics, University of Cambridge.
    • Handle: RePEc:cam:camdae:0008
    Note: IO
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    File URL: http://www.econ.cam.ac.uk/research-files/repec/cam/pdf/wp0008.pdf
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    More about this item

    Keywords

    Electricity supply; Utility regulation; Retail competition; Wholesale pass-through;
    All these keywords.

    JEL classification:

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

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