Rates Continue to Decrease in Competitive Markets, Including Ohio, Massachusetts, Pennsylvania, New York, Illinois and Maryland

The COMPETE Coalition responded today to decreasing electricity rates in competitive markets, acknowledging recent comments by Ohio Governor Ted Strickland and Maryland Governor Martin O’Malley.  The coalition also responded to discussion at a recent Federal Energy Regulatory Commission meeting (http://www.ferc.gov/EventCalendar/Files/20090521112807-A3-05-21-09.pdf) where staff noted wholesale customers “are able to purchase summer power today at prices about half of what they were last year," and that in some regional competitive markets, power prices are the lowest they've been since 2004 and 2002.

“In competitive electricity markets all over the country electricity prices are on the downturn.  This evidence should put to rest the superficial arguments suggesting that competitive markets aren’t working,” said Joel Malina, executive director of COMPETE.  “Recently two leading governors, Maryland Governor Martin O’Malley and Ohio Governor Ted Strickland, have both credited competitive markets for savings in their states.”

In Maryland, Gov. O’Malley boasted that the state expects to save between $10 million and $15 million by shopping for power in the competitive market, and in Ohio Gov. Strickland credited the market for producing lower rates for residential and business consumers.  In another example, in Pennsylvania the latest PUC estimates show if rate caps were lifted today declining energy prices would result in about a 7 percent price reduction for consumers in the Philadelphia area. 

“What we’re seeing play out in states like Ohio, Maryland, Pennsylvania and New York is the fact that competitive markets are built to respond faster to changes in the market, like reduced fuel costs, so customers see reductions in their rates much more quickly than under traditional monopoly regulation,” noted Malina.  “And a recent survey in New England demonstrates that ten years after restructuring consumers want competition in electricity markets, with 78% of New Englanders in favor of competition.  This all adds up to further proof that we should let competitive markets continue to evolve.”

Some additional recent examples of rate reductions for both residential and business customers in competitive markets include:

-- A May 2009 electricity auction in Ohio will result in lower annual electricity rates for customers of FirstEnergy Corp.  Those served by FirstEnergy subsidiary Ohio Edison will see a 16 percent decrease, while Toledo Edison customers and Cleveland Electric customers will see 12.6 percent and 7.4 percent decreases, respectively. 

-- In Pennsylvania recently completed power auctions for PPL Electric, Penn Power, and Allegheny Power provide a snapshot of encouraging market trends.  PPL Electric’s recent auction provided a price more than 20% lower than a similar auction in 2008.  Penn Power’s and Allegheny Power’s auction results were both less than the PPL Electric result.

-- Customers of Western Massachusetts Electric Company will see a decrease in their electricity bills beginning in July as a result of offers from competitive procurements, the company recently announced.  Continued drops in supply rates have resulted in four consecutive price decreases since October 2008.  Beginning in July, prices for residential customers will drop 27.5 percent from current rates, while small commercial and industrial customer prices will drop 24 percent.

-- According to the New York ISO, falling fuel prices and electricity demand have resulted in lower prices.  For the month of April 2009, the average price of wholesale electricity dropped 13 percent from prices in March and almost 50 percent from prices in January.  Currently at $39.64 per megawatt-hour, average wholesale electricity prices are at their lowest since May 2002.

-- Illinois customers of Ameren and Commonwealth Edison will be paying less for electricity this summer, after the companies announced the results of a competitive market auction will allow rate decreases of 8 percent and 7.5 percent respectively beginning in June. 

-- Residential customers of Baltimore Gas & Electric in Maryland will see their monthly electricity rates drop beginning October 1, 2009.  Commercial and industrial customers of BG&E could potentially see their rates drop as much as 18 to 33 percent as a result of recent competitive power procurements.