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 |
|---|---|
| Number of pages | 1 |
| Journal | Energy Research Letters |
| Volume | 5 |
| Issue number | Early View |
| DOIs | |
| Publication status | Published - 30 Sept 2023 |
User-Defined Keywords
- Vertical integration
- Fixed price offer
- Forward premium
- Wholesale market price volatility
- Retail market segmentation