Competitive Electric Markets Creating Energy Investments, Job Growth

As the economy continues its rebound, jobs creation has become the nation’s top priority – and competitive markets are doing their part.  Across the country, new energy infrastructure investments, and the job they create, are benefiting states that have opened their markets to competition.

Competitive markets also drive investment in new generation in order to meet future energy demand needs – which have been estimated at $1.5 - $2 trillion in new investment over the next 20 years.  In Texas, for example, competition has led to the development of more than 41,000 megawatts of new electricity generation and $5.8 billion in transmission infrastructure.

Considering the amount of infrastructure needed in the future, competitive markets shifting financial risks for these new projects from consumers to private investors is an important distinction from monopoly markets, where utilities can increase consumer rates to pay for new projects.

Recent developments in PJM Interconnection, the nation’s largest regional transmission organization, also underscore the competition’s benefits. The recent auction for the 2012-2013 delivery year yielded a net increase of over 7,210 megawatts (MW) of installed capacity. The new capacity represents nearly twice the increase in net capacity growth as compared to 2011-2012 and includes gas, diesel, coal, wind, and nuclear, reflecting a balanced mix of new supply.  PJM’s independent market monitor says in its 2009 quarterly state of the markets report that if current trends continue, older steam (coal) units in the Eastern United States will be replaced by new units burning natural gas.

Furthermore, a study released by the Energy Retailer Research Consortium – an  independent research group that supports retail energy choice – found that competitive electricity markets create jobs and promote energy efficiency and renewable energy development.  The recent American Wind Energy Association Year End 2009 Market Report showed that the U.S. wind industry set new records for installed wind capacity by adding nearly 10,000 megawatts of new capacity in 2009, and credits the role competitive markets have played in spurring the new capacity.

Transparent price signals in well-functioning markets are facilitating much-needed investments in clean energy generation and transmission systems. With our national energy and job creation needs increasing by the day, we are proud that competition is doing its part to lead the way.