New Research on Electricity Price Trends Shows Growing Cost Disparity Between Monopoly and Competitive States

September 26, 2019

California, Connecticut, Delaware, Federal, Georgia, Illinois, Maine, Maryland, Massachusetts, Michigan, New Hampshire, New Jersey, New York, Ohio, Pennsylvania, Rhode Island, Texas, Virginia, Washington DC, Wisconsin

New Data Updates and Supports Groundbreaking Research by the Late Dr. Phil O’Connor

(Harrisburg, PA) September 26, 2019 - The Retail Energy Supply Association (RESA), the nation’s leading trade association representing competitive retail energy suppliers, today released new data that reveals a growing cost disparity between monopoly and competitive states. The new data, which is an update to groundbreaking research by the late Dr. Phil O’Connor, supports the eye-opening conclusions he presented in 2017 and 2018 -- that consumers in states that allow retail energy competition are paying less for electricity, while consumers in monopoly states are paying more.

“As an expert in the industry and as a spokesperson for RESA, Dr. O’Connor worked tirelessly to promote the benefits of restructured markets and the importance of a consumer’s right to choose,” said Tracy McCormick, RESA Executive Director. “Now, one year after his untimely passing, RESA has chosen to honor his memory by periodically updating the price trend data he compiled in his 2017 and 2018 whitepapers.”

The whitepapers, “Restructuring Recharged: The Superior Performance of Competitive Electricity Markets 2008-2016,” followed by “The Great Divergence in Competitive and Monopoly Electricity Price Trends” (co-authored by Muhammad Asad Khan) look at the incredible price divergence between restructured and traditional monopoly states, along with the potential explanations.

In a review of the most recent data from the U.S. Energy Information Administration (EIA) comparing the weighted average price trends of the 35 U.S. monopoly states with the 14 U.S. jurisdictions that allow competition, the research shows that between 2008 and 2018:

  • The all-sector annual weighted average price in the 35 monopoly states was 18.7 percent higher in 2018 than in 2008.
  • The all-sector annual weighted average price for the competitive retail markets was 6.1% lower in 2018 than in 2008.

The research also finds that the cost implications of such a difference are staggering. The analysis shows:

  • If the annual percentage price changes in the 35 monopoly states had tracked with the percentage prices in competitive jurisdictions, consumers in the monopoly states would have saved one third of a trillion dollars ($385 billion).
  • If the same price trend patterns that occurred in the monopoly group had prevailed in the competitive jurisdictions, the cost to consumers in the 14 choice markets would have been higher by $263.1 billion. 

“What we are able to see by updating Dr. O’Connor’s research to include 2018 is that the data continues to support the same results he presented in his two whitepapers – consumers in competitive markets fair better,” said McCormick. “His ultimate goal was to use what we’ve learned through this research to adapt regulation to modern conditions. He believed it’s what consumers need and deserve – and we agree.”

RESA has made the new data available in a special section on its website. To read or download it, visit www.resausa.org/phil-oconnor-thought-leadership.

ABOUT RESA

The Retail Energy Supply Association is a broad and diverse group of retail energy suppliers who share the common vision that competitive retail energy markets deliver a more efficient, customer-oriented outcome than a regulated utility structure. RESA is devoted to working with all stakeholders to promote vibrant and sustainable competitive retail energy markets for residential, commercial and industrial consumers. 

 

 

 

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About RESA

Together with our members, we play a critical role in educating key stakeholders and are active in support of or opposition to bills that affect competitive electricity markets, consumers, and RESA initiated legislation.

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