Electricity Competition Drives Market Entry and Innovation in Products and Services, ABACCUS Study Shows

July 28, 2015

Connecticut, Federal, Illinois, Maine, Maryland, Massachusetts, New Jersey, New York, Ohio, Pennsylvania, Texas

Harrisburg, PA - More than 17 million residential customers are purchasing electricity from competitive energy suppliers in the states that allow for customer choice, driving ever-increasing numbers of competitive suppliers to offer an ever-widening array of innovative product and service offerings, a new report concludes.

The Annual Baseline Assessment of Choice in Canada and the United States (ABACCUS), which each year takes the pulse of the status of retail electricity competition in North America, once again finds energy choice to be robust and thriving in the states where it is allowed.

“In nearly every jurisdiction in North America, [competitive retail energy suppliers] continue to expand their presence, increase the number of offerings, and increase the variety of offerings available to households,” the ABACCUS report noted.

“Perhaps most significantly, there appears to be an improved understanding by [competitive retail energy suppliers] of consumer preferences, especially with regard to the ways in which consumers like to pay for electric service, learn about their usage level or receive alerts and notices,” the report found, adding that competitive energy suppliers “are very sensitive to what makes a consumer want to switch to a new provider [and] are also focused on how to keep that customer satisfied.”

For the eighth year in a row, ABACCUS found that Texas has the most robust competitive electricity market. “The primary reason for Texas’ success has been its market structure and treatment of default service,” the report said, noting that Texas is the only state that has effectively phased out having utilities provide default electricity service to those customers who choose not to actively shop for their electricity provider. Among the report’s recommendations is the phase out of the provision of default electricity service by utilities, a goal advocated by the Retail Energy Supply Association.

Other states cited as having thriving electricity markets were Pennsylvania, New York, Illinois, Ohio, New Jersey, Connecticut, Maine, Maryland, and Massachusetts.

The 17.1 million residential consumers who have exercised their right to shop for electricity represent 43 percent of eligible households, whereas in the market for large commercial and industrial customers 80 percent are actively purchasing their electricity needs from competitive suppliers, ABACCUS found.

But while market share is an important indicator of the robustness of competitive electricity markets, the ABACCUS report cites innovation as a major benefit for consumers.

“Too many electric industry stakeholders have a habit of describing the electric industry in terms of the electric commodity. That language is limiting and detrimental to reform,” the report said. “Consumer-driven innovation and product differentiation should be the goal of electricity restructuring. Innovation and product differentiation will mark the shift from pure commodity sales to a vibrant retail energy services market.”

The Retail Energy Supply Association is the leading national group representing competitive retail energy suppliers who support and promote competitive energy markets in the best interest of consumers.

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