RETAIL ELECTRICITY PRICE FORMATION FACTORS: LITHUANIAN CASE

Abstract

The developed system of retail electricity price formation factors is presented in this paper. It allows understanding retail electricity price formation process. Factors having impact on electricity cost, profit and electricity volume consumed are analyzed. Factors allowing explaining the volume of electricity consumed are grouped under the economic, social, climatic, technical-technological, political and demographical criteria. Analysis of Lithuanian retail electricity price is performed. Retail electricity price structure, its development in Lithuania is presented. Overview of regulating environment is done. The results of correlation analysis disclosed the positive and negative relationships between electricity price for household and 55 indicators. Three multiple linear regression equations, enabling to link electricity price for household and its factors into a single set, are prepared. The equations are assigned to: describe electricity price for household by macroeconomic factors and factors that impact on electricity production costs; assess the impact of changes of electricity production structure on electricity price for household; assess the impact of quantities and prices of electricity production factors and macroeconomic indicators on electricity price for household, as well impact of changes of electricity production structure on electricity price for household.

DOI: http://dx.doi.org/10.5755/j01.em.17.1.2259