Competitive Electricity Markets Continue Producing Strong Customer Value
Texas residential electric price offers have fallen by more than 28
percent since July 2008, when natural gas prices were at an all time
high, according to recent reviews. Texas serves as the most recent
example of how competitive electricity markets across the nation are
continuing to outperform monopoly structures.
"Texas continues to raise the standard by providing real benefits to
customers, illustrating how competition clearly outpaces monopoly
structures in pricing, in addition to other metrics like the development
of renewable energy. Because competitive markets respond faster to price
signals, customers in these markets see reductions in their rates much
more quickly than in monopoly markets, and Texas is a great example of
how this works," said Joel Malina, executive director of the COMPETE
Coalition, an advocacy organization representing more than 280
electricity customers, suppliers, generators and other stakeholders.
Texas power has developed a properly structured competitive market that
benefits customers. This conclusion was determined by three recent
reports, one by the Analysis Group and two by the Energy Retailer
Research Consortium. These studies reviewed the qualitative and
quantitative attributes of Texas power’s competitive market, and
combined to find that Texas has several key attributes: low barriers to
entry, many buyers and sellers resulting in many choices for consumers,
transparency of prices and options and large investment in generation
and transmission - including leading the nation in renewable wind
generation.
Among the other merits of a competitive market is its ability to spur
economic growth. According to the Texas-based Perryman Group,
competition has led to the development of more than 41,000 megawatts of
new electricity generation, an investment of $36.5 billion in ERCOT and
another $5.8 billion spent on transmission infrastructure.
"Texas has clearly embraced competition and its energy customers are
among the most supportive, demonstrating their preference for
restructured markets," Malina said.
Texans have voiced overwhelming support for competition, according to a
poll released in November of 2008 indicating that nearly 80 percent of
Texas energy customers favor the current competitive structure of the
Texas power electricity market. The poll, conducted by the Texas-based
Baselice & Associates, further indicated that support for competition
escalates when Texans learn that the competitive market encourages
investment in power plants using diverse fuel sources.
"Right now, the nation needs the power of competition to meet our energy
challenges. Transitioning back to a monopoly structure would be taking a
critical step backward," Malina said. "The economy is suffering and the
relief that consumers desperately need is only found through the
competitive market forces that place downward pressure on prices and
increase reliability. The monopoly model has failed us before, to the
tune of several billion dollars – a hefty price that we can't afford to
pay right now."
A study by the NorthBridge Group released in December of 2008 warns
against turning back the clock on electricity restructuring,
highlighting the pitfalls of the monopoly response to the energy crisis
of the 1970s and the resulting $200 billion mistake that befell
consumers. The report also indicates that the response and the inherent
flaws of the monopoly model are still being felt, decades later.
"Competition is and always has been the driver of innovation and
progress," Malina said. "Texas energy consumers, and consumers
nationwide, are seeing reductions in their rates much more quickly than
monopoly markets because competitive markets respond faster to price
signals."
Khristyn Brimmeier http://www.reuters.com/article/pressRelease/idUS189290+09-Feb-2009+BW20090209
Texas Power
