Technology

A new staff report from Arizona Corporation Commission (ACC) urges a full evaluation of the state’s electricity market given the benefits competition could offer the state’s consumers, economy and environment. The report, issued last week, comes as the ACC considers revising state rules to introduce competition to its power market.
 
Competition would create multiple economic benefits for Arizona consumers, according to ACC staff:
 

Regulators, environmental groups, technology innovators and customers are increasingly converging on the fact that market forces can empower consumers to manage increases in energy costs and stimulate the technological innovations required for America to transition to a clean energy economy.  The latest voice in this growi

During last week’s regular open meeting, staff with the Federal Energy Regulatory Commission presented their 2009 State of the Markets Report, and the outcome for energy consumers was profound.  Prices for natural gas were down by 50 percent across the country, and as a result electricity rates declined proportionately in the organized competitive markets, where gas is a key generation fuel. Costs for both natural gas and electricity were at the lowest levels seen since at least 2002 – even earlier in some regions, FERC staff reported.

Consumers need access to new, transformative technologies to manage their energy use, and monopoly barriers don’t make that easy, Reid Detchon, executive director of the Energy Future Coalition lamented at a Brookings Institution forum last week on climate change and the smart grid.

“Where does competition occur?” Detchon asked, citing the “structural impediments” for monopoly regulated utilities to promote reduced energy use by their customers.  Once the market signals are right, consumers’ energy use will be mitigated by price, Detchon said.

“We do need more competition,” said David Owens, executive vice president of business operations at the Edison Electric Institute, the trade group representing investor-owned utilities.  Pilot programs by utilities have shown that consumers respond to price signals, Owens noted.  These pilot programs showed there was a “tremendous shift” in energy use by low-income customers motivated to save on their electricity bill, he said.

Competitive electricity markets unlock the innovative solutions required to meet America’s energy needs and environmental objectives, said experts at a COMPETE Coalition panel discussion event. Unless markets are opened up to competition, the nation’s energy system cannot reach its full potential.

Competitive markets promote competition among power suppliers to deliver the best possible service to attract and retain customers. Comparatively, in monopoly-protected states, incumbent power providers have no incentive to innovate because ratepayers are captive to their monopoly utility and power suppliers are guaranteed recovery of their costs plus a profit.