The Energy Choice Coalition hosted a webinar on Wednesday on the consumer benefits of competition in electricity markets. The discussion is based around a recent R Street Institute paper, Electric Paradigms: Competitive Structures Benefit Consumers, and its recommendations for states to pursue market reforms that increase competition at all levels of electricity markets. Panelists included R Street Institute scholar Michael Giberson, Sunnova’s Meghan Nutting, Northwestern University’s Institute for Regulatory Law & Economics Director Lynne Kiesling, and ECC Director Robert Dillon.
Many regions of the country have historically had vertically integrated utilities where a single company generates, transmits, and distributes electricity. These outdated market structures leave consumers out of the decision-making process and lock private companies out of the market, limiting innovation and investment.
While progress is happing at the wholesale level, more needs to be done to increase retail competition, as the benefits of wholesale markets are limited without allowing consumers to choose their electricity supplier.
Only 13 states and Washington D.C. have fully restructured electricity markets that allow competition at both the wholesale and retail. Eighteen states still maintain regulated monopolies, while the remaining 19 states use a hybrid model with competition for big energy users at the wholesale level, but not for retail consumers.
While full restructuring – by which we mean quarantining the monopoly and enforcing a complete separation between the regulated monopoly wires businesses and competitive generation and retailing businesses – is the ultimate goal, there are many different reforms states could pursue to improve competition in electricity markets. Those reforms can improve reliability, encourage energy efficiency, reduce emissions, strengthen governance, and improve consumers’ experience with their electricity provider.