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Pricing Structures in the Deregulated UK Electricity Market

Salies, E. & Waddams Price, C. (2003). Pricing Structures in the Deregulated UK Electricity Market (03/04). London, UK: Department of Economics, City University London.


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.

Publication Type: Monograph (Discussion Paper)
Additional Information: © 2003 the authors
Publisher Keywords: Energy Competition, Non Linear Pricing, Simultaneous Equation Models
Subjects: H Social Sciences > HB Economic Theory
Departments: School of Policy & Global Affairs > Economics > Discussion Paper Series
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