New report shows successes of competitive electricity prices

Electricity deregulation in the U.S. has spawned a fierce debate about the benefits of competition versus strict government oversight, but the often these arguments lack the empirical data necessary to draw any conclusions. One industry report hopes to offer some firm evidence in support of the open and competitive markets for electricity providers using actual examples from the U.S. and Canada.

Sponsored by the Retail Energy Supply Association, an industry group for alternate electricity providers, and written by the Distributed Energy Financial Group, the report is the fifth in a series of annual releases tracking the development, the successes and the setbacks for electricity choice.

Known as the Annual Baseline Assessment of Choice in Canada and the United States, or ABACCUS for short, the report noted the growing strength of many of the open electricity markets in the U.S., particularly in states like Texas, Pennsylvania and New York, as well as declining prices in all such well-functioning markets. Perhaps more importantly, it found that Pennsylvania, New York and Illinois had all found substantially different ways to increase competition between electricity suppliers, each of which proved successful to some extent.

"This quantifiable data shows competition and customer choice continues to develop for all customer classes," David Fein, president of RESA, said in a statement. "As competitive market forces and structures grow and evolve, so too do the number of competitive suppliers and their offerings of innovative products and services. Clearly innovation goes hand-in-hand with the adoption of policies that foster the competitive market."

One important fact that the latest ABACCUS report noted, though this part relied only on anecdotal evidence, was that none of the states currently encouraging competitive electricity prices has considered moving back toward the traditional utility company monopolies, while the states of Florida and Arizona have considered making the switch.

This is not to say that electricity deregulation has worked smoothly in all cases. In particular, the report notes Michigan and California have failed to create a truly open market by imposing strict limits on the degree of competition, California by restricting prices and Michigan by limiting the number of people who could switch electricity suppliers.

The COMPETE Coalition, made of representatives of all the parties impacted by electricity deregulation, notes that the ABACCUS findings illustrate the growing options competition has created within certain states in addition to the benefits it has had on prices in many areas.