Robust Competition Creates Economic Benefits for Maryland Consumers

Several major competitive power suppliers have recently entered Maryland’s electricity markets, and the resulting competition is driving switching rates higher among consumers – a trend noted in a recent COMPETE report on the success of retail electricity markets.
 
These developments come fast on the heels of similar upward switching trends in other Mid-Atlantic states, and happen as lower energy prices present opportunities for consumers to lower their costs.
 
Since August, three of the nation’s largest competitive electricity suppliers have announced they were entering various utility service territories in the state. COMPETE member Direct Energy, who expanded into three service territories this Spring, recently announced it would offer competitive power to residential and small commercial and industrial (C&I) customers in the Pepco service area. The announcement comes with a seven percent discount from the standard rate through 2011.
 
In addition, Constellation Electric (also a COMPETE member), began offering competitive power plans to residential customers in several utility service territories this fall with discounts from incumbent service between seven and thirteen percent. Finally, Reliant Energy announced it will enter the Maryland market this fall, focusing on C&I customers before considering offering competitive plans to other market segments.
 
Customer switching rates have risen accordingly. Nearly 20,000 new customers signed up for competitive electricity supply in August, according to state data posted in Restructuring Today. These new customers pushed overall shopping up to 11.2 percent statewide, with the largest jump occurring in the residential market segment. The percentage of time-of-use accounts being served by marketers also noticeably grew to 15.5 percent, up from just 5.4 percent this May.
 
Rising percentages of customers taking advantage of competitive supply and accurate price signals comes at an opportune time, as lower energy prices across the country empower customers to lower their energy costs. Three of the largest incumbent utilities in Maryland anticipate at least a 10 percent decrease in standard rates – Baltimore Gas and Electric Co. predicts rates will decrease 11 percent, Delmarva Power predicts a 12 percent drop, and Pepco predicts rates will decrease 15 percent.
 
Viewed as a whole, the growth of Maryland’s competitive electricity market means good things for consumers. As the economy begins to rebound, residential and business customers have multiple choices when considering who to purchase their electricity from. And, as incumbent utilities are able to lower their prices, competitive suppliers are forced to compete against each other in order to attract and retain customers – driving the cost of competitive electricity even lower.