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

Dormady, N., Hoyt, M. Roa-Henriquez, A. & Welch, W. 2019. Who Pays for Retail Electric Deregulation?: Evidence of Cross-Subsidization from Complete Bill Data. The Energy Journal, 40(2): 161-194.

55 Pages Posted: 22 May 2018 Last revised: 9 Jan 2019

See all articles by Noah Dormady

Noah Dormady

John Glenn College of Public Affairs

Matthew Hoyt

Exeter Associates

Alfredo Roa-Henriquez

Ohio State University (OSU), John Glenn School of Public Affairs

William Welch

Date Written: December 11, 2018

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 Electricity 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.

Keywords: Deregulation, Public Utilities, Electricity Markets, Cross-subsidization, Divestiture

JEL Classification: H23, L43, L51, L94

Suggested Citation

Dormady, Noah and Hoyt, Matthew and Roa-Henriquez, Alfredo and Welch, William, Who Pays for Retail Electric Deregulation?: Evidence of Cross-Subsidization from Complete Bill Data (December 11, 2018). Dormady, N., Hoyt, M. Roa-Henriquez, A. & Welch, W. 2019. Who Pays for Retail Electric Deregulation?: Evidence of Cross-Subsidization from Complete Bill Data. The Energy Journal, 40(2): 161-194.. Available at SSRN: https://ssrn.com/abstract=3174939 or http://dx.doi.org/10.2139/ssrn.3174939

Noah Dormady (Contact Author)

John Glenn College of Public Affairs ( email )

110 Page Hall
1810 College Road
Columbus, OH 43210
United States

Matthew Hoyt

Exeter Associates

10480 Little Patuxent Pkwy #300
Columbia, MD 21044
United States

Alfredo Roa-Henriquez

Ohio State University (OSU), John Glenn School of Public Affairs ( email )

110 Page Hall
1810 College Road
Columbus, OH 43210
United States

No contact information is available for William Welch

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