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 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.
- Commercial and industrial customers of NSTAR in the Boston area will see their 2nd quarter electricity prices drop by 19 percent, as fuel prices used to generate electricity continue to fall. NSTAR buys electricity through a competitive bidding process and the lower rates, pending approval from the Massachusetts Department of Public Utilities, will go into effect April 1, 2009. (New)
- The results of the latest New Jersey Basic Generation Service (BGS) auctions show the wholesale electricity market responding to lower fuel costs, with electricity prices in this year's auctions 6-10 percent lower than last year's prices. New Jersey's BGS auctions ladder three year supply contracts with each auction serving 33 percent of demand. In other words, last week's auctions replace supply contracts from three years ago. The auctions displayed the range of choices in open markets, as winning bids in residential, commercial, and industrial auctions came from 11 different suppliers. (New)
- The Pennsylvania Public Utility Commission recently announced that rates for typical residential customers will decrease 10.96 percent in the Pennsylvania Power Co. (Penn Power) service territory. Rates for commercial customers will decrease in the range of 12.85 percent to 13.90 percent. These new rates go into effect from June 2009 through May 2010 for commercial customer supply needs, and June 2009 through May 2011 for residential customers. The PUC certified that the process used to determine default service rates was transparent, non-discriminatory and reflected market-based prices. (New)
- 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 Yorks 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.
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. *UPDATED WITH NEW DATA* 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.