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

Author

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  • 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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    References listed on IDEAS

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    2. Newbery, David M & Pollitt, Michael G, 1997. "The Restructuring and Privatization of Britain's CEGB--Was It Worth It?," Journal of Industrial Economics, Wiley Blackwell, vol. 45(3), pages 269-303, September.
    3. Chisari, Omar & Estache, Antonio & Romero, Carlos, 1999. "Winners and Losers from the Privatization and Regulation of Utilities: Lessons from a General Equilibrium Model of Argentina," World Bank Economic Review, World Bank Group, vol. 13(2), pages 357-378, May.
    4. N/A, 1989. "Annual Report," Evaluation Review, , vol. 13(3), pages 320-320, June.
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    Citations

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    Cited by:

    1. Nils-Henrik M. Von Der Fehr & Petter Vegard Hansen, 2009. "Electricity Retailing in Norway," RSCAS Working Papers 2009/04, European University Institute.
    2. Nils-Henrik M. von der Fehr & Petter Vegard Hansen, 2010. "Electricity Retailing in Norway," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 25-46.
    3. Brennan, Timothy, 2005. "Consumer Preference Not to Choose: Methodological and Policy Implications," Discussion Papers dp-05-51, Resources For the Future.
    4. Paul Joskow & Jean Tirole, 2007. "Reliability and competitive electricity markets," RAND Journal of Economics, RAND Corporation, vol. 38(1), pages 60-84, March.
    5. Johnsen, Tor Arnt & Olsen, Ole Jess, 2011. "Regulated and unregulated Nordic retail prices," Energy Policy, Elsevier, vol. 39(6), pages 3337-3345, June.
    6. Galetovic, Alexander & Muñoz, Cristián M., 2011. "Regulated electricity retailing in Chile," Energy Policy, Elsevier, vol. 39(10), pages 6453-6465, October.
    7. Littlechild Stephen C., 2002. "Competition in Retail Electricity Supply," Journal des Economistes et des Etudes Humaines, De Gruyter, vol. 12(2), pages 1-26, June.
    8. Defeuilley, Christophe, 2009. "Retail competition in electricity markets," Energy Policy, Elsevier, vol. 37(2), pages 377-386, February.
    9. Brennan, Timothy J., 2007. "Consumer preference not to choose: Methodological and policy implications," Energy Policy, Elsevier, vol. 35(3), pages 1616-1627, March.
    10. Boroumand, Raphaël Homayoun, 2015. "Electricity markets and oligopolistic behaviors: The impact of a multimarket structure," Research in International Business and Finance, Elsevier, pages 319-333.
    11. repec:eee:rensus:v:77:y:2017:i:c:p:395-405 is not listed on IDEAS
    12. Boroumand, Raphaël Homayoun & Zachmann, Georg, 2012. "Retailers' risk management and vertical arrangements in electricity markets," Energy Policy, Elsevier, vol. 40(C), pages 465-472.
    13. Sirin, Selahattin Murat & Gonul, Mustafa Sinan, 2016. "Behavioral aspects of regulation: A discussion on switching and demand response in Turkish electricity market," Energy Policy, Elsevier, vol. 97(C), pages 591-602.

    More about this item

    Keywords

    Electricity supply; Utility regulation; Retail competition; Wholesale pass-through;

    JEL classification:

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

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