Independent Reports Find Competition Working in Electric Markets Across the Country

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.

Residential customers in ComEd and Ameren territory were insulated from wholesale price increases for a decade because of mandated rate freezes. The resulting rate shock when residential customers were exposed to price increases led to significant political and legislative amendments in Illinois, according to the Commission. However, they also note that, even during this period, thousands of non-residential customers achieved significant savings by taking advantage of the opportunity to switch from bundled service to a competitive supplier.

At the end of 2008, 5,838 residential customers were enrolled in ComEd’s residential real-time pricing program and 3,147 were enrolled in Ameren’s. As residential competition in Illinois evolves, it’s clear that customers can receive the same cost savings and benefits that business has enjoyed for years.

Meanwhile, an independent assessment released this week by PJM’s independent market monitor found the wholesale electricity market managed by PJM Interconnection yet again to be competitive. Markets for energy, capacity, regulation, synchronized reserve, day-ahead scheduling reserve and financial transmission rights all produced competitive results for PJM, the regional transmission organization (RTO) that coordinates the movement of wholesale electricity in 13 states and the District of Columbia, concluded Monitoring Analytics.

Wholesale power prices in the region averaged $53.87 per MWh this past quarter, down from $58.09 per MWh for the first six months of the year. The report said that the overall results support the conclusion that prices in PJM are set, on average, by generating units operating at or close to their short-run marginal costs.

“The outcome is strong evidence of competitive behavior,” according to the market monitor.

Joel Malina | November 19, 2009