Economics

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Browsing Economics by Author "Ahmed, Maya"

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    Does Retail Choice Affect the Renewable Energy Price Premium of Residential Electricity Plans?
    (2020) Ahmed, Maya; Lambie-Hanson, Timothy
    Over the past 30 years, 13 US states have enacted retail choice for residential electricity customers. In recent decades, electric utilities have also experienced growing pressure to provide options for customers to purchase electricity generated from renewable sources. Previous economic literature indicates that renewable electricity plans often come with a price premium. However, no studies to date evaluate the impact of electricity market deregulation on renewable energy prices. This study uses a cross-sectional dataset of 1,659 residential electricity plans gathered from 15 pairs of counties on the border of retail choice states and non-retail choice states in March 2020. I perform a hedonic price regression using ordinary least squares (OLS) and county pair-number fixed effects to estimate the effect of retail choice status on the price premium of renewable electricity plans. This paper finds that renewable electricity content is associated with a price premium for residential electricity plans in both retail and non-retail choice counties. However, the price premium for renewable electricity plans in retail choice counties is significantly lower than the price premium in non-retail counties. This finding implies that electricity market deregulation may be an effective strategy for decreasing the price premium of renewable energy plans.