The Electric Markets Research Foundation has released a study claiming that retail choice has accomplished little for residential consumers.

We fault the study for generally attributing any benefits from restructuring to wholesale competition, while ascribing any price increases to retail competition. For example, the study faults retail choice for resource adequacy issues (and costs) faced by organized wholesale markets in which wholesale, not retail, regulators have imposed centralized capacity markets on customers, when the Texas experience shows that such wholesale capacity markets are wholly unneeded in a retail choice environment.

Moreover, while the study emphasizes price comparisons, and cites higher rates in retail choice markets, such rates are again driven by wholesale-market decisions divorced from (and usually negative to) retail markets, while comparing Texas rates at munis and co-ops within ERCOT to retail rates at the IOU TDUs with choice provides a much more accurate examination of the impacts of retail choice, and its downward pressure on prices

Nevertheless, the report recommended that state regulators encourage utilities to offer unbundled services to those customers who wish to shop. Generation services should be separated from non-competitive costs – i.e., the costs that the utility continues to bear, such as delivery (transmission and distribution) and customer service costs, even after the customer has chosen a different generation supplier. Unbundling competitive generation costs from other costs allows consumers to be able to compare generation prices offered by utilities and competing suppliers without the distraction of also analyzing non-competitive services. And utilities should be permitted to recover the costs of non-competitive services regardless of the customer’s choice of supplier, the study concluded.

Link to Study

Tags:
Deregulation   Retail Choice   Electric Choice  

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