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Has retail competition reduced residential electricity prices in Texas?

Author

Listed:
  • Zarnikau, J.
  • Cao, K.H.
  • Qi, H.S.
  • Woo, C.K.

Abstract

We estimate the impact of introducing retail competition on retail electricity prices paid by residential consumers in Texas's two largest cities, Dallas and Houston. Using the synthetic control method to obtain the counterfactual prices, we find that retail competition raised average prices by $0.0112/kWh ($11.2/MWh) in the transition period from 2001 to 2006 and by $0.0134/kWh ($13.4/MWh) during the period of unfettered competition from 2007 to 2020. However, when the US wholesale natural gas prices are relatively low, actual retail electricity prices in areas opened to retail competition are close to the counterfactual prices that would have prevailed had retail competition not been introduced, as measured by the counterfactual prices estimated using the synthetic control method.

Suggested Citation

  • 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).
    • Handle: RePEc:eee:juipol:v:84:y:2023:i:c:s0957178723001698
    DOI: 10.1016/j.jup.2023.101657
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    References listed on IDEAS

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    More about this item

    Keywords

    Retail competition; Electricity market restructuring; Residential electricity prices; Synthetic control; Texas;
    All these keywords.

    JEL classification:

    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • Z18 - Other Special Topics - - Cultural Economics - - - Public Policy
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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