Blog by RESA member, Constellation
COMPETITIVE ACCESS PROGRAMS: AN OPTION FOR BUSINESSES IN NON-CHOICE STATES
Many states participate in energy choice, allowing consumers to select a competitive electricity supplier of their choice. In the states that do not offer electricity choice, large businesses have been clamoring for more options to better control their energy spend as the new market conditions continue to transform the energy landscape. In response to customers’ requests, Competitive Access Programs (CAPs) have emerged or are actively being considered in a handful of states where retail choice currently does not exist.
Competitive Access Programs (CAPs) can be thought of as “non-traditional choice” programs that allow a limited number of commercial and industrial (C&I) customers to access the competitive wholesale electricity market, even as the utility continues to offer traditional cost of service rates.
Two key features of CAPS are that (1) they are essentially wholesale electricity buy-through programs tied to either renewable or non-renewable power, and (2) only allow for a limited number of large to very large C&I customers to participate.
The figure below is an illustration of how CAPs operate in a traditionally regulated utility market.
In most of the states that have CAPs, there are legislative or regulatory impediments to retail electric choice. CAPs can be viewed as a creative alternative that can help successfully navigate those impediments, allowing customers to reap the benefits of choice. In short, CAPs can be viewed as a “work around” in the absence of full-scale retail electric choice in response to strong customer interest.
Key Benefits of CAPs
If you are wondering why customers may be interested in pursuing CAPs, it is because they promote an assortment of benefits, such as:
- Electricity supply cost savings;
- Access to competitive renewable products;
- Greater contract flexibility and price stability; and
- Enhanced system planning benefits that help to manage capacity shortfalls (like when coal plants retire) and limit the need to build new capacity assets that may lead to an increase in customer rates.
A Key Driver of CAPs
One of the critical underlying drivers for the establishment of these programs has been customer engagement. CAPs tend to be more successful when customers are willing to engage local policymakers in support of these unique programs and build a case for how a CAP is in the best interest of key stakeholders.
The CAPs that have been successfully introduced in a handful of states across the country are creating value for those customers fortunate enough to access the competitive wholesale market. To continue the expansion of electricity choice in regulated markets, it’s important that large businesses actively engage local policymakers in support of CAPs, which may be a stepping stone to additional electric choice opportunities down the road.
To learn more about Competitive Access Programs (CAPs), including various notable CAPs that are currently active or are under consideration, we encourage you to download and read the CAPs white paper.