Did You Know

Competitive Markets in Texas and Michigan Move Forward in 2004, According to State PUC Reports

In annual reports to their respective state legislatures, the Public Utility Commission of Texas (PUCT) and the Michigan Public Service Commission (MPSC) reported continued growth in their competitive retail markets during 2004, both in terms of numbers of customers choosing competitive suppliers and sales volumes transacted under competitive arrangements.

The PUCT, in its January 2005 report to the Texas Legislature on the scope of competition in the state, reported a strong growth rate in the state’s electric retail market. The report indicated higher levels of competition in residential, commercial and industrial sales.

The switch to alternative electric providers has been highest in the commercial and industrial sectors; the PUCT reported that 25 percent of small commercial customers comprising nearly 53 percent of the electricity used by this group have switched, while more than 40 percent of eligible large commercial and industrial customers, comprising nearly 70 percent of the market, are being served through non-affiliate retail electric providers (REPs). Even though natural gas prices have dramatically increased in the past three years, competitive REPs have still been able to offer savings to customers at levels sufficient to entice switching from utility-affiliate REPs, according to the PUCT.

Michigan’s results confirm that nearly all growth in competitive retail markets has been occurring in the commercial and industrial sectors, where the potential savings are greater, where legislated rate freezes or reductions aren’t as pronounced, and where the costs to serve and maintain retail customer accounts are less. The MPSC, in its Jan. 31, 2005 report, noted progress in several key areas.

First, at year-end 2004, there were 28 licensed alternative energy suppliers in Michigan, up from 25 in 2003. Further, competitive retail sales in Consumers Energy service territory grew 41 percent in 2004, while the number of retail choice customers grew 81 percent. About 10 percent of commercial sales and 22 percent of industrial sales in Consumers’ region were under retail open access.

There was similar growth in Detroit Edison’s service territory. Comparable results were: 11 percent growth in sales and 40 percent growth in the number of retail choice customers; 32 percent of all commercial sales and 23 percent of all industrial sales are under retail access.

For more information, contact Daniel Dolan at ddolan@epsa.org, or 202-349-0153.