Blog entry November 2009

PennFuture, Pennsylvania’s leading conservation organization, is sponsoring a day-long event in Harrisburg on December 3 to examine the environmental and economic benefits obtained through competitive electricity markets.

The conference – Competitive Electricity Markets: Benefits for Consumers and the Environment – will address innovative energy efficiency and demand response programs that flourish in the state’s competitive market — saving consumers money and reducing electricity consumption. The event also will explore the significant impact of renewable energy, especially wind energy that has prospered within Pennsylvania’s competitive market structure.

Last week’s regular meeting of the Federal Energy Regulatory Commission featured a staff assessment of the outlook for energy markets this winter, including the “exciting” development that natural gas and electricity prices have fallen to their lowest levels since 2001. Forward prices for natural gas this winter are significantly lower than at this time last year, and gas was placed into storage earlier this year for consumption during peak demand winter months at an average price of $3.45, nearly a third of the $9.40 average cost last year, FERC staff reported.

Retail competition in Illinois has increased significantly since 2006, the Illinois Commerce Commission concluded in its Triennial Report on Retail and Wholesale Competition in the Illinois Electric Industry issued this week. During a transition period in the state, which ended in 2007, competition was largely confined to the largest commercial and industrial customers of the state’s two largest utilities, Commonwealth Edison and Ameren. The new data shows substantial numbers of medium and small non-residential customers switching to competitive power suppliers.

Nearly all (93%) of the largest commercial and industrial customers of both ComEd and Ameren are buying power in the competitive market. The Commission found that the level of switching activity is noticeably increasing for small and medium-sized customers — 55% of ComEd’s and 38% of Ameren’s customer load under 1 megawatt is provided by a competitive supplier.

A celebration of sorts is underway as businesses in Illinois note the positive change and successful results that have emerged since the state’s General Assembly passed legislation opening electric markets to competition a decade ago. In a letter to the editor in the Daily Herald, Tom Wolf, director of the Illinois Chamber of Commerce’s Energy Council, said that businesses are reaping the benefits of a competitive marketplace with competition spawning a new industry and creating new opportunities.

Crediting lower electricity prices in the competitive market, two Mid-Atlantic electric cooperatives, Choptank Electric Cooperative and Delaware Electric Cooperative, announced electric rate reductions this week for their members. The co-ops said the reductions were possible due to a sharp decrease in the cost of electricity provided by their wholesale power supplier, Old Dominion Electric Cooperative.

Prices in PJM Interconnection’s competitive wholesale electricity markets, the regional transmission organization (RTO) in which the co-ops operate, have declined by some 40 percent in the past year, reflecting changes in fuel prices and demand. Other organized competitive markets have seen prices decrease by 50 percent, with some producing the lowest prices seen since 2004 and 2002, according to a Federal Energy Regulatory Commission staff analysis. Competitive electricity markets compel power producers to offer their electricity at prices that reflect their cost savings. These savings are immediately passed on to the cooperatives’ members.

“Fair, transparent, open and efficient competitive markets are what we really need to emphasize in this country,” Jon Wellinghoff, Chairman of the Federal Energy Regulatory Commission, said at a recent energy policy forum examining how to meet energy demand while reducing carbon emissions. “I think if we did that in a comprehensive way a lot of these problems would take care of themselves.”

The facts support Chairman Wellinghoff.

Competition in the regions of Pennsylvania where rates caps have expired has yielded “greater choice and better values,” and this trend will only continue as rate caps around the state expire in 2010 and 2011, the Presidents and CEOs of the Commonwealth Foundation and PennFuture (Matthew Brouilette and Jan Jarrett) detail in an op-ed in today’s Harrisburg (PA) Patriot-News.

Promising news today for Maryland’s electricity customers. Dereck Davis, the House of Delegates chair of the Economic Matters Committee, will vote against any proposals to re-monopolize Maryland’s electricity industry, according to a report in the Maryland Gazette. The paper quotes him as vowing to prevent the issue from consuming his panel’s work in the 2010 General Assembly.

“I don’t understand what this is designed to accomplish," John Shelk, President and CEO of the Electric Power Supply Association, told Platts in response to the latest effort by the American Public Power Association (APPA) to deny American consumers the economic and environmental benefits of organized competitive electricity markets.

We agree. Trotting out its tired and misleading compilation of Energy Information Administration (EIA) statistics, and continuing to conflate state-regulated retail and federally regulated wholesale power markets, APPA and an assortment of activist groups called on Congress and federal energy regulators to look into allegedly “high electricity prices” in organized electricity markets.

States are committed to making the most of energy efficiency despite the stubborn economic downturn, a recent 50-state scorecard on energy efficiency policies, programs and practices from the American Council for an Energy-Efficient Economy (ACEEE) appears to indicate.

It's important to point out that eight of the top 10 energy-efficient states participate in organized markets overseen by regional transmission organizations. Competitive electricity markets continue to lead the way in enabling energy efficiency and other cost-saving measures, such as demand response and smart grid technology. From the COMPETE Coalition's perspective, this underscores the synergistic relationship that efficient, renewable energy has with competitive markets.