Regional transmission organization

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.

Crediting lower electricity prices in the competitive market, two Mid-Atlantic electric cooperatives, Choptank Electric Cooperative and Delaware Electric Cooperative, announced electric rate reductions this week for their members. The co-ops said the reductions were possible due to a sharp decrease in the cost of electricity provided by their wholesale power supplier, Old Dominion Electric Cooperative.

Prices in PJM Interconnection’s competitive wholesale electricity markets, the regional transmission organization (RTO) in which the co-ops operate, have declined by some 40 percent in the past year, reflecting changes in fuel prices and demand. Other organized competitive markets have seen prices decrease by 50 percent, with some producing the lowest prices seen since 2004 and 2002, according to a Federal Energy Regulatory Commission staff analysis. Competitive electricity markets compel power producers to offer their electricity at prices that reflect their cost savings. These savings are immediately passed on to the cooperatives’ members.