RESOLUTION TO SUPPORT COMPETITION AND CONSUMERS CHOICE IN ELECTRICITY MARKETS

RESOLUTION TO SUPPORT COMPETITION AND CONSUMERS CHOICE IN ELECTRICITY MARKETS

Whereas, many retail electricity consumers in the United States have no choice but to purchase services from a monopoly utility even though monopolies are no longer needed in the retail electricity services market.

Whereas, giving retail consumers, including homeowners, businesses, and industry, a choice of electricity services companies would lower energy bills and enhance consumer value.

Whereas, thirteen states and the District of Columbia have implemented retail consumer choice.

Whereas, electricity prices in the retail consumer choice jurisdictions have trended downward while prices have risen in states with monopoly regulation, according to a 2017 Retail Energy Supply Association report.[1]

Whereas, in states where consumer choice is allowed but a monopoly utility still offers default service, retail competition for residential consumers remains sluggish and little innovation has occurred because of the market power exercised by the utility, according to a 2014 academic journal article[2] by Purdue University professor Lynne Kiesling.

Whereas, several regions of the country have organized competitive wholesale electricity markets, but many states in these regions are still served by a vertically integrated, monopoly electric utility, precluding consumer benefits from competition in the wholesale sector.

Whereas, today’s retail electric power system is largely run and regulated the same way it has been since the early 1900s in states without consumer choice.

Whereas, advanced technologies are creating an opportunity to modernize the electric power grid, transforming it into a platform where energy resources across the grid, and increasingly behind the consumer’s side of the meter, play a major role in meeting system needs in a more efficient, cost-effective manner leading to lower consumer bills.

Whereas, such a platform can link multiple consumers and producers, which would create additional consumer choices, increase efficiency, and spur technological innovation.

Whereas, the incentives embedded in the retail electricity regulatory framework designed for the last century are blocking the transition to a modern, 21st century grid.

Whereas, the transmission and distribution grid is the only segment of the electricity system that is still a legitimate natural monopoly.

Whereas, the generation and retail services sectors of the electricity system can be competitive, as shown over the past twenty years.

Whereas, monopolies should be limited to economic sectors where competition cannot emerge due to economies of scale.

Whereas, the State of Texas has restricted privately owned electric utility ­­­­monopolies in its Electric Reliability Council of Texas (ERCOT) region to just providing transmission and distribution services.

Whereas, Texas is the only state that has done such a restriction and the ERCOT retail electricity services market is consequently far more competitive than anywhere else in the country, as measured by customer switching between retail providers and percentage retail price decreases.

Whereas, this competition in Texas has enabled innovation, better customer value, and greater consumer choice.

NOW, THEREFORE, LET IT BE RESOLVED, all electric utilities in the United States, both public and privately owned, should be restricted to the transmission and distribution grid, so that robust competition and consumer choice can emerge in the retail services and wholesale electricity markets, facilitating a transition to a modern, 21st century grid.

[1] Philip R. O’Connor, Ph.D, Restructuring Recharged: The Superior Performance of Competitive Electricity Markets 2008-2016, Retail Energy Supply Association (2017), available online here.

[2] Lynne Kiesling, Ph.D, “Incumbent Vertical Market Power, Experimentation, and Institutional Design in the Deregulating Electricity Industry,” The Independent Review, v. 19, n. 2, (Fall 2014), available online here.