PowerFacts
Rate Decreases Seen in States with Restructured Electricity Markets - UPDATE
After a period of steady increases in electricity prices nationwide regardless of state regulatory structures, consumers in states with restructured electricity markets are beginning to see rate decreases as the costs of fuel and other commodities involved in electricity generation have leveled off or decreased. Customers are benefiting from the transparency and rapid responsiveness of restructured markets to changing conditions and as demand falls. Below are just a few examples of falling electricity prices in states with more open markets.
- 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 drops 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 also elicited a drop in 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.
- A May 2009 electricity auction conducted by Ohio state utility regulators 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. "We are more than pleased that ratepayers in northern Ohio, many of whom have been victimized by the economy, will benefit from the outcome of this energy auction," PUCO Chairman Alan R. Schriber stated. "We're proud of the way the auction was conducted and commend the participants, the auction manager and our consultant for making this such a success."
- Ameren Illinois Utility customers will be paying less for electricity this summer, after the company announced an 8 percent drop in prices beginning June 1. The decrease comes as a result of a sharp decline in wholesale electricity prices following a reduction in general energy demand. The average residential customer will save approximately $100 annually under the new prices.
- ComEd customers in Illinois can expect to see a drop in electricity prices as big as 7.5 percent, or $6.36 per month, beginning in June 2009. A dramatic drop in the cost of electricity purchased through a competitive procurement process is responsible for the decrease in residential electricity prices.
- Residential customers of Baltimore Gas & Electric 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.
To see additional examples of rate decreases featured in earlier PowerFacts, please click here.
These recent rate reductions refute the claims of critics that past rate increases were the result of restructuring and were caused by wholesale competitive markets. The reductions show that the earlier increases were in fact the result of underlying market conditions such as increases in fuel and other costs. Competitive power markets reflect both rising and falling commodity prices for generation inputs. When underlying market conditions cause prices to rise, consumers are not kept in the dark and instead can respond more readily than in states with substantial time lags in how and when rates are adjusted. The rate reductions in restructured states are in sharp contrast to rate increases that continue in many states that elected not to restructure. Information on rate increases in states with vertical integration and cost-of-service regulation is available on EPSA's web site, www.epsa.org. Rate Decreases Seen in States with Restructured Electricity Markets - UPDATE
CONTACT: JOHN SHELK
(202) 349-0154or 703-472-8660
EPSA is the national trade association representing competitive power suppliers, including generators and marketers. These suppliers, who account for nearly 40 percent of the installed generating capacity in the United States, provide reliable and competitively priced electricity from environmentally responsible facilities serving global power markets. EPSA seeks to bring the benefits of competition to all power customers.