A Postcode Lottery?: Regional Variations in Electricity Prices for Inactive Consumers

CCP Working Paper 18-10

36 Pages Posted: 13 Mar 2019

See all articles by David Deller

David Deller

Centre for Competition Policy

Glen Turner

University of East Anglia (UEA)

Catherine Waddams Price

University of East Anglia (UEA) - School of Management

Date Written: January 2019

Abstract

The introduction of a price cap for consumers who have not switched to cheaper deals in the British energy market reflects increasing political concern about the higher prices paid by these consumers compared with their more active counterparts. In this paper, we demonstrate the variations in prices paid by inactive consumers for electricity in different parts of Britain over the last 45 years. The regions identified as the cheapest and most expensive vary noticeably over the period, while the magnitude of the regional differences are, if anything, lower since the introduction of competition than they were before privatisation. We explore the characteristics of consumers who stated that they had never switched supplier, and who were therefore subject to these regional price differences, using unique data from a consumer survey in 2011. Responses to the question ‘have you ever switched supplier’ identified several characteristics of inactive consumers which were consistent with the findings of previous studies: not being retired, having lower electricity expenditure, not having a gas supply and using certain payment methods are associated with a consumer reporting never having switched. However applying a consistency test (namely observing whether consumers reported being with their region’s incumbent supplier) highlighted a number of issues with relying solely on survey data to identify long-term inactivity.

Keywords: Electricity Prices, Energy Market, Regional Differences, Consumers, Switching

JEL Classification: D12, D22, D63, L94, L97, Q41

Suggested Citation

Deller, David and Turner, Glen and Price, Catherine Waddams, A Postcode Lottery?: Regional Variations in Electricity Prices for Inactive Consumers (January 2019). CCP Working Paper 18-10 , Available at SSRN: https://ssrn.com/abstract=3339192 or http://dx.doi.org/10.2139/ssrn.3339192

David Deller (Contact Author)

Centre for Competition Policy ( email )

University of East Anglia
Norwich Research Park
Norwich, Norfolk NR4 7TJ
United Kingdom

Glen Turner

University of East Anglia (UEA)

Norwich Research Park
Norwich, Norfolk NR4 7TJ
United Kingdom

Catherine Waddams Price

University of East Anglia (UEA) - School of Management ( email )

Norwich, Norfolk NR4 7TJ
United Kingdom

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