PowerFacts
States Report Consumer Savings from Electric Competition
Just one month apart, the utility commissions of two of the nation’s largest state customer bases issued landmark staff reports that document the successes of their competitive electricity markets, finding significant savings for consumers. The reports concluded that competitive markets were the driving forces behind more efficient power generation and increased generation capacity. Efficiency improvements have allowed for both the retirements of old, inefficient power plants, and more efficient fuel consumption, thus dampening the effect of rising fuel costs.
On February 2, 2006, the Public Utility Commission of Texas issued a staff report, “Electricity Prices in Competitive Retail Markets in Texas,” which found that millions of electric customers in the Electric Reliability Council of Texas (ERCOT) had realized significant savings in prices as a result of retail competition. The report found that customers in Houston and Dallas could have realized savings of $1,450 and $800, respectively, since January 2002 by switching to the lowest-cost provider in their territory. The report also noted that “even customers who did not switch to a competitive rate have benefited from the introduction of retail competition” with “a variety of service and pricing options and efficient mechanisms for promoting renewable energy and energy efficiency.” The report may be downloaded at http://interchange.puc.state.tx.us/WebApp/Interchange/Documents/32198_7_504891.PDF.
On March 2, 2006, the New York Public Service Commission (PSC) issued a staff report covering the 1996 to 2004 time-frame, which found that inflation-adjusted ("real") electricity prices dropped by an average of 16 percent in the state for residential customers and between an average of 14.7 and 17.7 percent for commercial and industrial customers. Nationally, the report pointed out that customers in nearly every state that offered retail competition "fared better than the average residential electric customer in states without retail access." The report may be downloaded at http://www.dps.state.ny.us/StaffReportCompetition.pdf.
Both the Public Utility Commission of Texas and the New York PSC reports put particular emphasis on the benefit of investment in efficient generation, which, they said, would not have occurred to the same extent in a fully regulated environment. Such efficiencies led to lower prices and a reduction of air emissions throughout both states. The New York PSC also pointed out that "unlike past investments of regulated utilities, ratepayers are not at risk for cost overruns or inefficient operations" for the 4,200 MW of new, efficient generation capacity that had been added since utilities had divested their generation facilities.
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.