States with competitive electricity markets saw cheaper energy prices, more energy infrastructure investment to improve efficiency and reliability, and greater emission reductions compared to monopoly states, finds a new study released today by the Pacific Research Institute.
“Residents and businesses lose out when states cling to outdated government-mandated electricity monopolies,” said Dr. Wayne Winegarden, PRI senior fellow in business and economics and author of “Affordable and Reliable.” “Customers in monopoly states pay higher energy prices, see less effective infrastructure investment, fewer emission reductions, and endure less reliable power systems.”
Among key findings of “Affordable and Reliable”:
Competition Lowers Prices for Customers
Empowering generators to compete with one another in established wholesale markets has led to significant declines in the wholesale electricity costs. Pricing data examined in three key markets demonstrate that wholesale electricity prices in competitive markets are trending downward and were at or near 6-year lows as of 2020.
Competition Improves Reliability and Efficiency
Competition increases reliability as RTOs and ISOs cover a wider geographic area, and have more diverse energy generation options and market-established prices.
Reviewing two common measures of reliability, PRI’s analysis shows that the SAIFI was 10.4 percent lower in states with retail competition compared to the monopoly states and 6.5 percent lower on the SAIDI. SAIFI is a measure of the frequency of a sustained interruption whereas SAIDI is a measure of the duration of a sustained recovery.
Competition Boosts Emission Reductions
Reviewing state emission levels based on EIA data between 2008 and 2018, PRI’s analysis shows that emissions in competitive states declined on average 12.1 percent, compared to 7.3 percent in monopoly states. Competitive retail markets empower consumers to express their electricity preferences including receiving power generated from lower-emission sources.
