Abstract
We use a profit-maximizing model of forward pricing, which revealed that an electricity retailer’s fixed price offer (FPO) contains a large forward premium that encourages vertical integration of a generation company and a retailer. However, vertical integration does not always reduce FPOs, particularly when residential customers are segmented by consumption size and price sensitivity. Hence, a proposed merger of a big generation company and a big retailer requires regulatory scrutiny.
Original language | English |
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Pages (from-to) | 1-4 |
Number of pages | 4 |
Journal | Energy Research Letters |
Volume | 5 |
Issue number | 3 |
Early online date | 30 Sept 2023 |
DOIs | |
Publication status | Published - 31 Aug 2024 |
User-Defined Keywords
- Vertical integration
- Fixed price offer
- Forward premium
- Wholesale market price volatility
- Retail market segmentation