PROJECTS
1) Social and Distributional Impacts of Restructured Retail Electricity Markets
Have you ever wondered why some people are paying a substantially higher price for their electricity than others? Basic arguments of economic efficiency suggest that in an efficient market, competition should drive prices toward consistent, competitive and fair prices. This is a study that evaluates residential consumer impacts of Ohio’s retail electricity markets in both Ohio and Pennsylvania. It evaluates differences in observed rates by differing types of customers across various social and economic strata.
2) Economic Markups on Renewables: A Study of the Profit Margin on Renewable Retail Electric Offers
Some energy retailers sell electricity supply contracts containing some portion of supply from renewable sources. How are those prices formed and what is the profit margin on renewable offers? This study investigates how retailers markup renewable offers and quantifies the profit margin observed by suppliers.
3) Price Formation in Retail Electricity Markets
How are retail electricity prices formed in restructured retail electricity markets? This is a study that investigates the economic drivers of retail electricity prices with an explicit focus on the role of competition and market uncertainty. The study investigates how auction dynamics in electricity procurement markets influence retail prices, and it evaluates how competitive retail electric suppliers use those procurement auctions as a price signal to set their own supply offers.
4) A Conjoint Study of Retail Electricity Supply Contract Component Revealed Preferences
When consumers shop for retail electricity supply offers, what attributes are most important to them? We conduct an experimental conjoint analysis to investigate the hidden attributes of retail electricity supply offers that drive consumer preferences beyond price alone.
5) Consumer Preferences in Retail Electricity Markets
How do residential electricity consumers feel about energy suppliers? We conduct a sentiment analysis using machine learning techniques to investigate supply component attributes that drive customer utility and disutility. The study focuses on evaluating differences between what customers say they want, versus what they are actually receiving.
6) Consumer Equity in Municipal Electric Aggregation
Some restructured retail electricity jurisdictions allow municipalities or other subnational units of government to aggregate default electricity supply through voter-enabled referenda. These municipalities often contract with one of a handful of retail suppliers in an oligopolistic market. Are the prices they receive in these contracts competitive? And why do we see significant differences in contracted rates between and across jurisdictions from the same supplier? This study provides a statistical analysis of retail price differences in municipal aggregation rates with an explicit focus on social and equity drivers of rate disparities.
PAPERS
Efficiency and Consumer Welfare Under Retail Electricity Deregulation (forthcoming). Journal of Critical Infrastructure Policy.
Authors: Noah Dormady, William Welch, Yufan Ji, Stephanie Pedron, Abdollah Shafieezadeh, Alberto Lamadrid, Matthew Hoyt, Samantha Fox
Abstract:
Many critical infrastructure services operate under either price regulation or in deregulated systems. The grand policy experiment of deregulation has been heavily studied, but evaluations have been limited at the retail level where end-user prices are often difficult to obtain. This paper presents an in-depth look at the retail market for electricity in a retail deregulated, or restructured, market—Ohio. We build and introduce a comprehensive SQL database of every daily filed retail electricity offer over a nine-year period of study; over two-million records. We integrate this data with other external data sources and conduct a detailed descriptive analysis of market prices as observed by end consumers at the retail level. We find that the lion’s share of “competitive” retail electricity choice offers are more costly to consumers than the utility’s default service rate and have higher markups over the wholesale price, and we find that when prices exceed the default rate they do so by a considerably larger margin than when consumers observe savings. We also find that even well-informed consumers are able to find a welfare-improving rate relative to the default rate between only 43 and 59 percent of the time. We conclude with a discussion of implications, and root economic causes of the efficiency and consumer welfare problems we observe.
How are Retail Prices Formed in Restructured Electricity Markets?
Authors: Noah Dormady, Alfredo Roa-Henriquez, Matthew Hoyt, Matthew Pesavento, Grace Koenig, William Welch and Zejun Li
Abstract:
A key challenge in obtaining efficient and competitive retail rates in restructured electricity markets is constructing an appropriate default generation price. Default prices in restructured states are often set by competitive procurement auctions in which firms bid to supply a fixed percentage (i.e., tranches) of a utility’s full-requirements load obligation (supply, capacity, ancillary services, and sometimes transmission). Auction clearing prices serve as a price heuristic for other competitive retail supply offers on the open market. Default service also substitutes for competitive retail supply for customers that cannot or will not shop. The efficiency and competitiveness of these auctions, therefore, is of societal importance. In this paper, regression analysis is performed on a unique ten-year dataset of wholesale, retail, and input market parameters for Ohio’s four investor-owned utilities to evaluate factors that influence these auction results. The models indicate that auction clearing prices are determined in more complex ways than a simple pass through of wholesale market costs. They indicate that auction competitiveness is a key driver of efficient retail price. They also indicate that wholesale market volatility, which is more challenging for suppliers to hedge, leads to significantly inflated retail auction prices. The paper provides policy implications for the market design of competitive retail electricity markets.
Price Markups on Renewables: How Much Profit is Baked into Retail Renewable Choice Offers?
Authors: Yufan Ji, Noah Dormady, Abdollah Shafieezadeh, Matthew Hoyt, Alberto Lamadrid, William Welch, Samantha Fox
Abstract: Project Abstract Coming Soon
Willingness to Pay for Retail Choice Product Attributes: A Conjoint Study
Authors: Yufan Ji, Noah Dormady, Abdollah Shafieezadeh, Matthew Hoyt, Alberto Lamadrid, William Welch, Samantha Fox
Abstract: Project Abstract Coming Soon
Lessons for Residential Energy Survey Data Collection
Authors: Samantha Fox, Noah Dormady, Alberto Lamadrid, Abdollah Shafieezadeh, Matthew Hoyt, and Yufan Ji
Abstract:
Project abstract coming soon.
Price Competitiveness and Consumer Equity in Electric Municipal Aggregation
Authors: Coming soon.
Abstract:
Project abstract coming soon.