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Pricing structure in the deregulated UK electricity market

  • Evens SALIES

    (University of Perpignan & of Paris 1 - Panthéon Sorbonne)

  • Catherine Waddams

    (University of East Anglia)

As residential energy markets open to competition, consumers can choose from a range of tariffs offered by different suppliers. We examine the relationship between the fixed charge levied on each consumer, and the variable charge per unit of energy used across all these tariffs. Data are the tariffs offered in April 2002 in the 14 electricity regions of Great Britain by seventeen suppliers, seven of whom operate nationally. Our analysis focuses on the revenue trade-off for the company. We identify the effect of payment method on the relationship between fixed and variable charge. We find significant effects of the distribution and transmission charges which the suppliers pay in each area, as well as the size of the market both by number of customers and area; and confirm that incumbents charge significantly more that entrants. We also find significant differences between the prepayment and credit tariffs.

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Paper provided by EconWPA in its series Industrial Organization with number 0406002.

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Length: 24 pages
Date of creation: 05 Jun 2004
Date of revision:
Handle: RePEc:wpa:wuwpio:0406002
Note: Type of Document - pdf; pages: 24
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  1. Robert D. Willig, 1978. "Pareto-Superior Nonlinear Outlay Schedules," Bell Journal of Economics, The RAND Corporation, vol. 9(1), pages 56-69, Spring.
  2. Otero, Jesus & Waddams Price, Catherine, 2001. "Price Discrimination, Regulation and Entry in the UK Residential Electricity Market," Bulletin of Economic Research, Wiley Blackwell, vol. 53(3), pages 161-75, July.
  3. Catherine Waddams & Ruth Hancock, 1998. "Distributional effects of liberalising UK residential utility markets," Fiscal Studies, Institute for Fiscal Studies, vol. 19(3), pages 295-319, August.
  4. repec:ccp:journl:v:53:y:2001:i:2-3:p:209-223 is not listed on IDEAS
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