Washington D.C.

Competitive electricity markets are well-structured with effective oversight, and deliver economic and environmental benefits to consumers. These markets have been restructured to promote competition among energy market participants, while maintaining strict regulatory oversight. Competition in these markets fosters innovation, clean energy solutions, green jobs, and affordable energy.

In competitive markets, power suppliers compete against each other to provide the best possible service at the lowest cost in order to attract and retain customers. Comparatively, in monopoly-regulated states, incumbent power providers have no incentive to innovate or lower costs because ratepayers are captive to their monopoly-protected supplier.

Today, more than two-thirds of the nation’s electricity consumers live or do business in states that are part of organized competitive wholesale and retail electricity markets.

THE SOUTH
In March 2010, consumers in the Tennessee Valley Authority’s seven-state service territory started paying between $2.50 and $5.50 more a month due to fuel cost adjustments. This increase is in addition to the 20 percent rate hike ($12 to $15 increase per 1,000 kilowatt-hours per month) that went into effect in October 2008. The rate hike was factored into TVA's 2009 budget, which included $12.6 billion to cover operating expenses and nearly $2.1 billion for new capital investments.

ALABAMA
A typical customer of Alabama Power Company will pay almost $200 a year more, or about $16 per month, for electricity under a rate hike of 14.6 percent, starting October 9th pending approval by the state Public Utility Commission. Electricity costs would also rise about 16 percent for commercial users and an average of 25 percent for industrial customers, if the entire request is approved.

Our nation faces significant energy and environmental policy challenges. The organized markets operated by the Regional Transmission Organizations (RTOs) and Independent System Operators (ISOs) are the best way to assure an efficient and adequate supply of electricity and to meet the nation’s current and future energy and environmental needs. RTOs and ISOs are delivering benefits today in the following areas:

America must take aggressive action to tackle our energy challenges, and the electric power industry is uniquely situated to lead the way. The COMPETE Coalition is dedicated to ensuring that policymakers at all levels recognize that well-structured organized electricity markets are essential. The RTOs and ISOs are providing the level playing field, renewable generation, demand resources, customer tools and efficient markets that are proving to be essential in achieving these goals and holding down costs to consumers along the way.

Problems in the financial markets have been attributed in some measure to “deregulation” and ineffective regulation and oversight. But there is no corollary with the organized competitive electricity markets, which often are erroneously described as “deregulated.” While the electricity industry has undergone restructuring over the last decade, regulation and oversight are as strong now as they ever were before restructuring and vigorously protect against the same types of problems occurring in the electricity industry.

Electricity Policy Considerations for the Obama Administration and the 111th Congress

The independent market monitors for every Independent System Operator (ISO) and Regional Transmission Organization (RTO) in the country have once again found these organized markets are competitive and provide economic benefits to consumers, based on detailed reports for 2009. The annual reports note that the organized wholesale markets are appropriately reflecting lower fuel prices and passing these competitive power options along to consumers, with electricity prices dropping by roughly 50 percent from 2008 to 2009.