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Who Pays for Retail Electric Deregulation? Evidence of Cross-Subsidization from Complete Bill Data

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Listed:
  • Noah Dormady
  • Matthew Hoyt
  • Alfredo Roa-Henriquez
  • William Welch

Abstract

Retail electric deregulation has been identified in the literature to have favorable price impacts to businesses and households because of the introduction of competition into rate-setting. Those studies often ignore the important role of regulatory intervention. They are also generally national or multi-state aggregated studies that ignore state- and utility-specific dynamics, and most rely on Energy Information Administration (EIA) price data that does not account for riders and surcharges on consumer bills, which can total more than 60 percent of bills. Using a unique panel of representative, complete electricity bill data from the Public Utilities Commission of Ohio (PUCO), this paper provides a multi-utility panel regression analysis of the effect of retail deregulation on total electric bills in Ohio. The results identify two main sources of cross-subsidization that have generally cancelled out the favorable effects of restructuring. Both types of cross-subsidies result in substantial burden shifts to residential consumers.

Suggested Citation

  • Noah Dormady & Matthew Hoyt & Alfredo Roa-Henriquez & William Welch, 2019. "Who Pays for Retail Electric Deregulation? Evidence of Cross-Subsidization from Complete Bill Data," The Energy Journal, , vol. 40(2), pages 161-194, March.
    • Handle: RePEc:sae:enejou:v:40:y:2019:i:2:p:161-194
    DOI: 10.5547/01956574.40.2.ndor
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    References listed on IDEAS

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    Cited by:

    1. Mats Kröger, 2024. "Cream-skimming through PPAs – Interactions between Private and Public Long-term Contracts for Renewable Energy," Discussion Papers of DIW Berlin 2092, DIW Berlin, German Institute for Economic Research.
    2. Dormady, Noah & Roa-Henriquez, Alfredo & Hoyt, Matthew & Pesavento, Matthew & Koenig, Grace & Welch, William & Li, Zejun, 2025. "How are retail prices formed in restructured electricity markets?," Energy Economics, Elsevier, vol. 143(C).
    3. Lowing, David & Munich, Léa & Techer, Kevin, 2025. "Allocating the common costs of a public service operator: An axiomatic approach," International Review of Law and Economics, Elsevier, vol. 81(C).
    4. Taminiau, Job, 2025. "Community choice energy: Bridging the gap between sustainability and affordability in electricity supply," Energy Policy, Elsevier, vol. 198(C).

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