Working Paper: NBER ID: w24558
Authors: Catherine Hausman
Abstract: Energy prices are volatile, affect every consumer and industry in the economy, and are impacted by regulations including gas taxes and carbon pricing. Like the pass-through literature in general, the growing energy pass-through literature focuses on marginal prices. However, multi-part pricing is common in energy retail pricing. I examine the retail natural gas market, showing that while marginal prices exhibit full or nearly full pass-through, fixed fees exhibit negative pass-through. This is consistent with the stated desire by utilities and regulators to prevent "bill shock." I discuss implications for pass-through estimation and for proposed alternative pricing structures for regulated utilities.
Keywords: energy prices; passthrough; natural gas; regulation
JEL Codes: L11; L95; Q41
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| citygate prices (L97) | fixed fees (D49) |
| citygate prices (L97) | volumetric charges (L97) |
| fixed fees (D49) | citygate prices (L97) |
| citygate prices (L97) | marginal prices (D40) |
| citygate prices (L97) | bill volatility (E42) |