Do gentailers charge higher residential electricity prices in the Texas retail electricity market?

Abstract

In areas of Texas where energy consumers can choose among retail providers of electricity, we find that the prices offered by companies which are involved in both power generation and retail sales (“gentailers”) tend to be higher than the prices offered by Retail Electric Providers (REPs) which are independent of any generation company. Yet, within the group of gentailers, we find significant differences in their pricing levels and patterns. These findings are based on graphical and regression analysis of pricing plans advertised on the Power to Choose website. We offer hypotheses that might explain these pricing behaviors. As retail competition in electricity markets is considered or refined in other regions, these findings from Texas may prove instructive.