Pricing structure in the deregulated UK electricity market
Abstract
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.
Origin : Files produced by the author(s)