Electricity retail competition: the case of the UK

The objective of liberalising electricity supply was to create
competitive retail markets where asset-light suppliers would compete on price.
This paper explores the quantitative and dynamic relationship between
domestic retail prices and the wholesale price since one would expect a
symmetric pattern with a stable and low retail margin. In this article, taking the
UK market for analysis, a time-series approach is applied to calculate the
extent and timing of pass through between wholesale and retail price
variations. The preliminary results indicate that the impact effect and long-run
effects from the wholesale to the retail market is quite low.