Research
Working Papers
This paper studies the causes and consequences of pricing heterogeneity in markets for residential electricity, a nearly homogeneous good. I uncover adverse efficiency and distributional impacts of competition when consumers face heterogeneous search frictions. I show that consumers pay different prices for electricity in the same market, with low-income households and marginalized communities paying systematically higher electricity prices than their higher-income counterparts. These pricing patterns are consistent with a model of firms price discriminating on search frictions through marketing. Using data from Baltimore, I estimate a structural model that shows that this marketing leads to an annual welfare loss of 14% of industry-wide variable costs. Despite having only slightly larger search frictions, low-income households pay substantially higher prices than high-income households primarily due to lower marketing costs in low-income communities. Auxiliary analyses rule out alternative explanations, such as differing underpayment risks or preferences for differentiated product attributes. The model demonstrates that policy implications are nuanced: while marketing restrictions can increase consumer surplus, they may also increase prices for some consumers who pay less attention to their prices.
Building efficiency, electrification, and distributed solar PV bill savings under time-based retail rate designs (with Andrew Satchwell, Cesca Miller, and Elaina Present)
Building energy technologies and distributed generation, including energy efficiency (EE), distributed solar PV (DPV), and building electrification, are critical to meeting decarbonization goals. Rate design may play an important role in determining the customer economics of adopting these technologies, but it is unclear whether – and to what extent – current rate design trends support or impede progress toward these goals. In this study, we answer these questions by quantifying the range of residential customer bill impacts of EE, DPV, and building electrification investments under current and emerging time-based retail electricity rate designs (i.e., time-of-use, event-based pricing, coincident demand charges, and real time pricing). We also compare these customer bill savings to power system and societal benefits and assess how well the investments are compensated relative to the societal value they provide.
Local Government vs. Competitive Provision of Residential Electricity: Pricing and Pass Through
This paper analyzes two key components of consumer welfare under government versus market provision of a private good: price levels and price uncertainty. The electricity sector provides a policy-relevant setting to plausibly causally estimate the directional effect of ownership on retail prices. Specifically, this paper investigates the question: Do residential consumers face higher retail price levels and exposure to wholesale prices when supplied electricity by their local government or by a private electricity supplier subject to competitive forces? Using 2005-2017 data from 13 U.S. states that had both local government and retail electricity markets, with the former's geographic locations determined decades earlier and the latter entering the leftover markets, I compare within-state differences in price levels and pass through of marginal costs across the two supplier types. I find evidence that retail prices and wholesale price pass through were lower under government electricity provision than competitive retail provision during this timeframe.
Publications
The Effects of Electric Utility Decoupling on Energy Efficiency The Energy Journal (2016) 37(4): 297-314
Most economists agree that revenue decoupling eliminates utilities' incentives to encourage overconsumption of energy, but critics argue that decoupled utilities have no incentive to promote energy efficiency. This paper models the repeated game between regulator and utility and shows that decoupled utilities have greater equilibrium utility demand-side management (DSM) investment in the presence of DSM-related shareholder incentives. It then shows empirically that decoupling is historically associated with significant residential electricity consumption reductions, augmented DSM spending levels, and increased DSM investment efficacy.
Are Residential Customers Price-Responsive to an Inclining Block Rate? Evidence from British Columbia (with Michael Li, Ren Orans, and C.K. Woo) The Electricity Journal (2014) 27(1): 85-92
Are residential customers price-responsive to an inclining block rate? Using BC Hydro's bimonthly billing data, the authors document statistically significant price elasticity estimates to provide BC Hydro with the support for using a residential inclining block rate (RIB) as a tool for energy conservation.
White Papers
Deep Decarbonization in a High Renewables Future (with Amber Mahone, Zachary Subin, Douglas Allen, Vivian Li, Gerrit De Moor, Nancy Ryan, and Snuller Price) Prepared for the California Energy Commission (2018)
The Implications of Rate Design and Policy on Net Energy Metering Impacts: CA and NV Case Studies EUCI NEM 2.0 Conference (2015)
Nevada Net Energy Metering Impacts Evaluation (with Snuller Price, Katie Pickrell, Zachary Ming, and Michele Chait) Prepared for the State of Nevada Public Utilities Commission (2014)
California Net Energy Metering Ratepayer Impacts Evaluation (with Snuller Price, Brian Horii, Michael King, Andrew DeBenedictis, Katie Pickrell, Ben Haley, Jon Kadish, Ryan Jones, Julia Sohnen, and Jerry Bowers) Prepared for the California Public Utilities Commission (2013)