Price signals

Technology innovation driven by market forces has unlocked abundant domestic supplies of natural gas from unconventional geographic formations, resulting in enormous consumer benefits– namely, lower electricity prices and cleaner air. This natural gas success story shows how market forces drive innovation better than regulation, and should serve as an important lesson for policy makers tempted to intervene in the markets in response to transient market price signals.
 

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.
 

Competitive electricity markets will stimulate plug-in hybrid-electric vehicle (PHEV) technology, facilitate integration of PHEVs with the power grid, and unlock consumer benefits. This message emerged during a conference sponsored by COMPETE and the University of Illinois-Springfield that explored the future of plug-in hybrid electric vehicles and the smart grid.

Smart meter technology, considered a lynchpin to widespread smart grid success, has taken a major step forward with the conclusion of a Washington, D.C. pilot program. PowerCentsDC, a two-year program, tested how consumers reacted to a variety of time-of-use price signal and rate programs.
 

A combination of hotter summers, an aging electrical grid and uneven adoption of smart grid technology has increased the need for electric infrastructure investment, according to a University of Minnesota research study cited by CNN reporter Thom Patterson.
 
COMPETE agrees significant investment is needed in our national grid to reach our nation’s sustainable energy goals and maintain electric reliability needs. But CNN missed an important opportunity to highlight how competitive electricity markets are helping ensure reliability and encourage innovation and investment while protecting consumers from the financial risk of poor or failed investment decisions.
 

Competition is helping the nation’s organized markets weather this summer’s peak electricity demands as heat waves gripped much of the country. Both private investment and innovative demand response technology, two of the most distinct benefits of competitive markets supported by the transparent price signals markets provide, have kept the lights on in spite new power-demand records.
 

Smart meters combined with enhanced information from utilities could significantly reduce electricity consumption and costs, according to a new report from the American Council for an Energy-Efficient Economy (ACEEE).
 

Dynamic pricing is a term used to describe a key feature of competitive electricity markets. Put simply, electricity costs vary so power is cheaper when demand is low and more expensive when demand is high.
 
Now, a new report finds dynamic pricing significantly benefits low-income customers by empowering them to take control of, and reduce, their electricity bills. The report from the Institute for Electric Efficiency (IEE) challenges the prevailing view that low-income customers would be harmed by dynamic pricing and makes a strong argument for widespread adoption of one of the biggest economic benefits of competitive markets.
 

While Congress and the Obama administration consider how to reduce greenhouse emissions and stimulate clean energy innovation, COMPETE urges all stakeholders involved in climate legislation talks to remember the power of a market-based approach.
 
Established results tell the tale – competitive markets offer the best path forward to achieve America’s energy needs and environmental objectives. In the Northeast, the Regional Greenhouse Gas Initiative (RGGI), which spans parts of two organized competitive electricity markets, is the first mandatory, market-based CO2 emissions reduction program in the U.S. – and it has been working successfully for several years.
 
By phasing in an approach to emissions reductions, set against an established cap, RGGI has provided predictable market signals, regulatory certainty businesses can operate against, and much-needed revenue for participating states. Best of all, the system is supported by the consumers it serves.

Retail competition in Pennsylvania is benefitting consumers, said several members of the Pennsylvania Public Utility Commission this week at a public hearing. Chairman Jim Cawley, Commissioner Wayne Gardner, and Commissioner Robert Powelson made their supportive comments before the PA Senate Consumer Protection and Professional Licensure Committee.

Commissioner Powelson dispelled tired arguments made by critics that consumers can’t make informed decisions and won’t respond to market signals, by submitting the PJM independent market monitor’s 2009 State of the Market Report into the hearing record. The report found PJM electricity markets competitive for the ninth year in a row, with wholesale electricity prices dropping over 40 percent from 2008.