Can information make retail energy markets more equitable? Experimental evidence from the District of Columbia

• In Event: Factors Affecting Energy Transitions: Politics, Information, and Policies

Abstract

About one-third of all US states have restructured – or competitive – electricity markets in which retail electricity suppliers offer alternatives to utility companies. In theory, this competition could benefit consumers, including by reducing electric bills. However, we observe that retail electricity suppliers charge an average of 43% more than the local utility’s average supply service rate. We also find that there are proportionally twice as many retail supply customers in arrears compared to the local utility's customers. Monthly average arrearages for customers of retail suppliers are also nearly twice as high compared to customers of the local utility. Higher supply prices have a disproportionately burdensome impact on low- to moderate-income (LMI) households because these households pay a higher percentage of income for electricity services. Electricity consumers' complaints suggest that some consumers may not be aware of the differences between electricity suppliers, or that they even get to choose electricity suppliers. In this study, we provide multiple types of consumer protection information to LMI households that are receiving utility assistance and are enrolled with retail suppliers charging higher rates than the local utility. This information is intended to help LMI households navigate the complex retail electricity supply market in the District of Columbia. We use a randomized controlled trial design with survey data collection and choice experiments to estimate impacts of different types of behavioral interventions on households’ preferences for electricity supply services.

Author

• Jennifer Richmond, University of Maryland, College Park
  Presenting Author