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Report: Energy Deregulation Brings Lower Rates and Better Services

States that have allowed retail electric suppliers to compete for customers have seen increased product and service innovation compared to regulated states with monopoly utilities that both supply electricity and deliver it to customers’ homes and businesses, according to a recently released report.

The 2011 Annual Baseline Assessment of Choice in Canada and the United States (ABACCUS) report, by Distributed Energy Financial Group LLC (DEFG), found that electricity choice is “thriving and growing” among commercial, industrial and residential customers in many deregulated U.S. states and Canadian provinces “because well-structured retail electric markets foster the introduction of new products and services that are not available in traditional monopoly areas.”

The report cited competition for customers among retail electricity suppliers as the driving force behind a growing list of energy management options that customers are responding to favorably. Nat Treadway, DEFG managing partner and lead author of the report, said in a statement that the research clearly showed that well-structured deregulated electricity markets were delivering new and better services at lower costs than ever before. “We are seeing new companies, new investments in local economies, and the development of a new energy services marketplace,” Treadway said.

Residential electricity customers in deregulated markets are benefitting from electric choice and are in a position to take advantage of additional benefits from new technology as it is implemented, the report stated. Smart grid infrastructure technologies like advanced smart meters, communications and control devices and in-home electricity usage displays were cited as examples of technologies that have allowed retail energy suppliers to develop pricing and service choices that benefit consumers. Electric choice was also credited for helping the public address goals related to customer support, energy efficiency, job creation and the environment.

According to the report, consumers “now have more choices, more information and better ways to control their energy bills and increase the value of electric service in their lives.”

The report also highlighted several trends in 2011, including declining retail power prices, an increase of customer protections and the development of low-income assistance programs and energy efficiency and demand-response programs. Electricity choice also led to dramatic investments in renewable energy. In fact, 80 percent of U.S. installed wind capacity was found to be located in deregulated electricity markets.

The scorecard that the ABACCUS report uses to qualify the data it collects on deregulated electricity markets helps U.S. policymakers understand how their decisions positively or negatively affect the development of those markets.

Of the 18 deregulated electricity markets analyzed in the report, Texas’ competitive market ranked first in overall excellence for the fifth consecutive year. The other two markets given “Excellent” ratings were New York (2nd) and Pennsylvania (3rd). Illinois scored 7th with a “Good” rating. California came in last place with a rating of “Unsatisfactory.”

Sources

“Competitive Electricity Markets Spur Consumer-Focused Innovations,” Distributed Energy Financial Group press release, Nov. 30, 2011.

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