PowerFacts
Rate Decreases Seen in a Number of States with Restructured Electricity Markets
After a period of steady increases in electricity prices nationwide regardless of state regulatory structures, consumers in a number of 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. Below are just a few examples of falling electricity prices in states with more open markets.
- The New York Independent System Operator reported in December 2008 that wholesale electricity prices in the state had dropped 54 percent since June 2008. This decrease in wholesale electricity prices was directly related to a drop in the price of New York's primary fuel, natural gas, which fell 45 percent during that same period.
- Customers of TXU Energy in Texas could see their electricity prices lowered as much as 15 percent beginning February 1, 2009. This amounts to a savings of roughly $340 over the course of a year and comes as a result of a 45 percent drop in natural gas prices from peak prices last summer.
- In Rhode Island, the Public Utilities Commission approved a decrease in National Grid's electricity rates, which will lower the typical customer's electricity bills by $14 per month, or about 14.6 percent. The drop in electricity prices was the result of a steep drop in crude oil and natural gas prices, down 74 percent and 54 percent, respectively, since July 2008. National Grid originally sought a 13.7 percent price decrease, in November 2008, but as fuel prices continued to drop, the company revised its figures. The new rates took effect January 1, 2009.
- Effective March 1, 2009, Maine residents and small businesses are expected to see their electricity prices drop roughly 10 percent. The lower electricity prices reflect recent decreases in wholesale electricity prices, which have fallen in sync with the price of natural gas, which makes up the largest portion of Maine's energy supply mix. The Maine Public Utilities Commission announced recently that they would be accepting bids for new standard offer energy prices, which would help to lower prices for ratepayers in Maine.
- Business customers of Western Massachusetts Electric Company will see a 3 percent decrease in their electricity bills beginning January 2009, due to recent drops in the cost of fuels such as gas and oil. Residential customers will see a slight 1 percent increase in their bills. The Massachusetts Department of Public Utilities approved the rate changes, effective January 1, 2009.
- The Connecticut Department of Public Utility Control recently approved a rate decrease for customers of United Illuminating Co. of roughly 30 cents per month, or 0.3 percent, over the course of 2009. The DPUC adjusted what had originally been a rate increase to reflect more recent market developments.
These recent rate reductions refute the claims of critics that past rate increases were the result of restructuring and 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 these costs. 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 Rate Decreases Seen in a Number of States with Restructured Electricity Markets
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.