Letter to the Editor: "Competition"
Letter to the Editor: Competition
By William L. Massey, Counsel Compete Coalition
Meriden Record-Journal, CT
February 11, 2009
Editor: Competitive electricity markets are not to blame for escalating rates (“Electric Division to Congress: Give us a break!” R-J, February 4). As the costs of global fuel prices increase or decrease, so does the cost of electricity, in all states – both regulated and competitive. And in fact, competitive rates are falling. The New York ISO reported in December that wholesale power prices dropped 54 percent since June. Falling fuel prices in Rhode Island, Maine and Massachusetts have also resulted in lower wholesale prices in those markets.
In any market, we all know that prices go up or down in response to fundamental market forces. Because competitive markets respond faster to fuel price changes, customers in these markets see reductions in their rates much more quickly than in traditional regulated areas. For example, in contrast to rates falling in competitive markets, regulated states like Missouri and Colorado increased rates by nearly 28 percent, last year alone, and other regulated states are not far behind.
Electricity competition spurs innovation and provides other benefits. More than 70 percent of wind our wind facilities are in competitive markets despite the fact that only 44 percent of wind energy potential is in these areas, according to the American Wind Energy Association. Other benefits, like increased reliability and demand response, are also characteristic of competitive markets. As of September 2007, more than 1,200 MW of demand response resources spurred by competitive markets are being used to help protect power system reliability in New England. Markets and competition provide innovation, greater renewables, reliability benefits and opportunities for customers to respond to price signals.
It’s hard to imagine getting the necessary innovation for a thriving clean energy economy under a system of monopoly regulation.
William L. Massey, Counsel Compete Coalition, Washington, DC
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