Transparency of Retail Energy Pricing: Evidence from the US Natural Gas Industry

Authors

  • Chi-Keung Woo,

    1. Department of Economics, Baptist University of Hong Kong, Kowloon Tong, Hong Kong
    2. Energy and Environmental Economics, Inc., San Francisco, CA, USA
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  • Jay Zarnikau,

    Corresponding author
    1. Frontier Associates LLC, Austin, TX, USA
    2. LBJ School of Public Affairs and Division of Statistics, The University of Texas at Austin, Austin, TX, USA
    • Correspondence to: LBJ School of Public Affairs and Division of Statistics, The University of Texas at Austin, Austin, TX 78713, USA. E-mail: jayz@utexas.edu

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  • Ira Horowitz,

    1. Warrington College of Business, University of Florida, Gainesville, FL, USA
    2. Public Utilities Research Center, University of Florida, Gainesville, FL, USA
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  • Alice Shiu

    1. School of Accounting and Finance, Hong Kong Polytechnic University, Hung Hom, Kowloon, Hong Kong
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Abstract

We test and cannot reject the hypothesis that retail pricing of natural gas is transparent for commercial and residential customers served by regulated local distribution companies in the United States. The periods of adjustment to a wholesale price change are 1.54 months for the commercial price and 1.69 months for the residential price. These findings support the view that regulated local distribution companies quickly adjust retail prices to fully capture any change in the wholesale natural gas price. Copyright © 2013 John Wiley & Sons, Ltd.

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