ABACCUS

A major Pennsylvania environmental group has endorsed competition’s benefits, just as rate caps expired across the state and millions of consumers gained the ability to shop for their electricity on January 1. PennFuture’s report, “Consumers Win: A Decade of Electricity Competition,” touts the success of competition, saying “the benefits to Pennsylvania ratepayers cannot be disputed.”
 

Competitive electricity markets are driving innovation, stimulating new investment, and delivering customer choice across North America, concludes the 2010 Annual Baseline Assessment of Choice in Canada and the United States (ABACCUS).
 

The benefits keep accruing for Texas as the state’s competitive electricity market continues to develop. Fast on the heels of a recent study that found Texas energy rates have fallen, news about the abundance of power suppliers and spread of solar energy underscore the fact that competition is having a positive impact on consumers.

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.

Restructured electricity markets in Texas have encouraged competition that has led to lower electricity prices for residential consumers, according to a new study by the Texas Public Policy Foundation’s Center for Economic Freedom. The study, Prices, Reliability, and Consumer Choice in the Texas Electricity Market, shows that past reliance on U.S. Energy Information Administration (EIA) state-level data has significantly understated the reduction of competitive residential electricity prices with retail restructuring.

Using market data, the study finds that residential electricity rates in Texas have fallen well below the national average since competitive markets were established in 2001. Monopoly rates in now-competitive areas of Texas averaged 9.98 cents per kilowatt hour (kWh) in 2001, which were 15.8 percent above the national average. Today, the average competitive electricity rate of 11.01 cents per kWh is 8.71 percent below the national average, and the average of the 15 lowest offers, 9.27 cent per kWh, is 23.13 below the national average.  Adjusted for inflation, the average competitive price is 9.46 percent below the average 2001 monopoly rate, the average of the 15 lowest prices is 24.39 percent lower, and the lowest average price is 30.5 percent lower – staggering evidence that competition has driven electricity prices lower for consumers.