Electricity competition beneficial to consumers

In fact, there is now an impressive two-decade track record demonstrating the economic and environmental benefits for consumers who are allowed to shop for electricity in competitive markets.  Competition helps keep prices down and drives efficiencies that translate into cleaner electricity.  And the level playing field provided by competitive markets is easing market entry by cleaner generating resources, such as wind and solar power.  In competitive markets, customers benefit from the flexibility to choose from a variety of technologies, products and services offered by competing providers.

Yet despite these real and tangible benefits, there remain ongoing policy threats to the long-term sustainability of the markets and the demonstrable economic and environmental benefits they provide.  As the Principles explain, these challenges include subsidized generation in competitive markets, preferential treatment of some resources, non-bypassable retail charges to recover the generation-related costs of certain resources, and resources procured without using a competitive market process.

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In response to these challenges, COMPETE’s Principles lay out the elements of well-structured competitive electricity markets to ensure their sustainability.  These include accurate and transparent price signals, markets that are open to all market participants without arbitrary restrictions on competition, non-discriminatory rules and practices allowing competition on a level playing field, an end to subsidies that distort the market, competitive procurements open to all qualified resources, and clear and transparent resource adequacy standards.

In particular, policy makers should avoid picking winners and losers in the marketplace. Competitive markets do that in a much more cost-effective and consumer-friendly manner.

For instance, some states seek to recover the costs of certain generation facilities from all customers through a non-bypassable surcharge.  These charges are anti-competitive, acting as a tax on shopping customers by forcing them to pay twice for generation service if they choose a competitive supplier. Such charges saddle customers with risk of poor generation supply decisions and practices.

Competition is the driving force behind our nation’s economy, the largest in the world.  Well-functioning competition works for all of our other goods and services, and it works for electricity too.  Our nation will prosper more if well-functioning competitive electricity markets are allowed to continue to drive economic and environmental benefits for consumers.

Malina is executive director of the COMPETE Coalition, which fosters competition in the electricity markets, and CEO and general manager of Wexler & Walker.