Electricity pricing by regional electricity utilities

The study examines electricity pricing in Finland’s electricity distribution companies, which operate as regional monopolies.

The central question of the study is the extent to which monopoly status is reflected in the price of electricity, and whether pricing varies according to the type of utility. Different forms of corporate organisation — municipal public enterprises, limited liability companies, and cooperatives — may weigh the interests of consumers and producers differently. The theoretical section analyses the effects of company size, market power, and revenue structures on price formation.

The empirical section tests, among other things, the hypothesis of price-equalising pressure across different regions. The study complements earlier research by Rännäri (1992) by adding the average price of purchased electricity as an explanatory variable. The central finding is that large utilities do not pass on to consumers the savings obtained from cheaper purchased electricity, but instead use them to widen their price margin and improve profitability. (AI translation)

• ISSN: 1236-7176
• ISBN: 951-9282-75-0