Compete Issue Briefs

Our nation faces significant energy and environmental policy challenges. The organized markets operated by the Regional Transmission Organizations (RTOs) and Independent System Operators (ISOs) are the best way to assure an efficient and adequate supply of electricity and to meet the nation’s current and future energy and environmental needs. RTOs and ISOs are delivering benefits today in the following areas:

America must take aggressive action to tackle our energy challenges, and the electric power industry is uniquely situated to lead the way. The COMPETE Coalition is dedicated to ensuring that policymakers at all levels recognize that well-structured organized electricity markets are essential. The RTOs and ISOs are providing the level playing field, renewable generation, demand resources, customer tools and efficient markets that are proving to be essential in achieving these goals and holding down costs to consumers along the way.

The independent market monitors for every Independent System Operator (ISO) and Regional Transmission Organization (RTO) in the country have once again found these organized markets are competitive and provide economic benefits to consumers, based on detailed reports for 2009. The annual reports note that the organized wholesale markets are appropriately reflecting lower fuel prices and passing these competitive power options along to consumers, with electricity prices dropping by roughly 50 percent from 2008 to 2009.
 

COMPETE joined several associations representing virtually all major electricity and natural gas providers in a letter to Senate leaders regarding the consideration of financial services legislation. The legislation would change the regulation of derivatives transactions used by energy companies to hedge business risks that impact their customers.

COMPETE today submitted a letter to Michigan Governor Jennifer Granholm and state legislative leaders petitioning them to reconsider legislation that caps the state's competitive market at 10 percent of retail sales. The letter was delivered on behalf of scores of businesses that represent nearly 877 facilities, $278 million in annual electricity costs, 74,634 employees, and thousands of customers who visit them each week.

The retail cap legislation, adopted in 2008, was quickly reached and significantly limits electric customers' ability to choose their electric supplier. Since the law was enacted, the state's monopoly utilities have filed a series of rate increases totaling an almost 10 percent increase from October 2008 to December 2009. Michigan's electric rates are now the highest in its region, which includes Illinois, Indiana, Ohio, and Wisconsin.

• The electric price offers for residential consumers have fallen more than 28 percent since July 2008, when natural gas prices were at an all time high. Texas serves as the most recent example of how competitive markets across the nation are continuing to outperform monopoly structures.
“The ERCOT Competitive Market is Responsible to Recent Drops in Natural Gas Prices,” Association of Electric Companies of Texas, January 2009

• The average competitive price of electricity today is 9.46% below the average 2001 regulated price and 8.71% below the national average.
Texas Public Policy Foundation, January 2010

THE MIDWEST MARKET BENEFITS CONSUMERS

THE PJM MARKET BENEFITS CONSUMERS

• PJM’s RTO operations produced benefits and economic value yielding as much as $2.3 billion in annual savings for the region:

   Reliability -resolving transmission constraints, gains in economic efficiency from regional reliability planning – from $470-$490 million in annual savings;

   Generation Investment -reduced reserve requirements and increased demand response – from $640 million-$1.2 billion in annual savings;

THE NEW YORK MARKET BENEFITS CONSUMERS

• Wholesale electricity prices in New York State have dropped to their lowest levels in the 10 year history of the market.  The average cost of wholesale electricity in the state was $48.63 per megawatt hour (MWh) in 2009, 49% below the 2008 average of $95.31/MWh. “Since 2000, competitive markets in New York have contributed to an 18% reduction in fuel-adjusted wholesale power costs.”
           NYISO press release, March 11, 2010

THE NEW ENGLAND MARKET BENEFITS CONSUMERS

• The average price of wholesale electricity fell 48 percent in 2009, from $80.54 per megawatt-hour (MWh) in 2008 to $41.99/MWh last year. The 2009 price was lower than the comparable low of $48.55/MWh set in 2003, the year that competitive markets were launched in New England.
ISO New England press release, March 1, 2010