20-Year Study Shows Benefits of Energy Deregulation

Given that U.S. electricity use had, by 2013, gone up by 13 times since 1950, it shouldn’t come as a surprise that the average American household now uses 903 kilowatt hours of electricity each month -- and pays $107 to the electric company for each bill. And while there are some measures you can take to lower your bills (installing a programmable thermostat, for example, can help you save about 10% on heating and cooling costs), it may seem like the larger market that sets prices on electricity is out of your control. But that’s not precisely true: You can help yourself and other consumers in the long run by supporting deregulated energy markets.

New analysis of nearly 20 years’ worth of data has shown that consumers see benefits in price, investment and reliability when markets are deregulated, meaning that the method of power generation are separated from the companies that distribute that energy. Those benefits of energy deregulation are detailed in a study sponsored by the COMPETE Coalition and released in July.

“In a compelling example of what Justice Louis Brandeis termed states serving as laboratories of democracy, for nearly two decades, two retail electricity models, choice and monopoly, have operated in parallel allowing reliable comparison of the two models on key indicators,” COMPETE Counsel William Massey explained in a news release. “The data demonstrate that customer choice jurisdictions that steadily adapted and expanded retail choice out-perform, or at least compare favorably with, the states that have so far rejected broad-based customer market access.”

Here are some of the key points of the study, broken down:

- Between 1997 and 2014, prices in markets where consumers could choose their energy suppliers rose by 4.5% less than inflation; prices in monopoly states, on the other hand, rose by 8.4% more than inflation.

- In states with utility monopolies, electricity accounted for a bigger portion of consumer cost of living in 2014 than it did in 1997; the opposite was true for states where energy deregulation was implemented.

- Power generation in states offering customers energy choices produced energy more efficiently and at higher capacities than power generation monopoly states.

“It has been nearly two decades with workably competitive electricity markets in 13 states and the District of Columbia, and we can no longer ignore the facts,” commented Robert Powelson, commissioner and former chair of the Pennsylvania Public Utility Commission. “Customer choice works for electricity consumers and businesses, helping to drive down prices and attract billions of dollars of investment in new, more efficient generation.”

The full study, “Evolution of the Revolution: The Sustained Success of Retail Electricity Competition,” is available for download by the public online. Did you know about the potential energy savings associated with energy deregulation? Share your reaction to the new study in the comments.