New data out of Massachusetts reinforces a clear pattern: over the last decade, customers paid $738 million more under competitive electric supply, with low-income households hit the hardest. ALL ratepayers were impacted, even those who never opted in.
Read MoreFor years, proponents of electricity deregulation have argued that competition lowers costs for consumers. New data tells a very different story.
According to new proprietary analysis by Power for Tomorrow (PFT), informed by 2024 Energy Information Administration (EIA) data, residential customers in deregulated electricity states are paying dramatically more for power than those in traditionally regulated markets.
Read MoreA recent poll of Louisiana voters, conducted by Peak Insights, reveals a striking trend: while many initially support electricity deregulation, that support collapses once they learn what it actually means.
Read MoreCompared to utilities in states that stayed regulated, deregulated utilities faced significantly higher costs of energy. This resulted from both higher wholesale prices as well as purchasing a higher share of energy, instead of generating it. We find that restructuring lead to sharp increases in wholesale prices despite reductions in marginal fuel costs, such that generation facilities were able to charge prices at substantial margins above costs. We show that this can explain a large portion of the increase in retail rates after the restructuring of the electricity sector.
Read MoreWithin the traditional utility regulatory model, utilities receive a franchise to provide electricity to an entire geographic area, planning for reliable power and relatively predictable prices for consumers.
Two decades ago, a wave of utility restructuring swept parts of the country. With it came different “flavors” of utility regulation. Some states permitted their utilities to participate in wholesale power markets, with competition between electric generators administered by Regional Transmission Organizations (RTOs) and Independent System Operators (ISOs).In some cases, states went even further and “deregulated” their utilities through full “unbundling,” which included a divestiture of generation assets to third party operators and enactment of electricity “retail choice.”
Most prominent were Texas and several states in the Northeast and Midwest. Advocates of deregulation promised more competition, innovation, reliable service and lower consumer prices.
Deregulation has not delivered on those promises.
Read MoreIn this white paper, the WBK team (Tony Clark, Ray Gifford, and Matt Larson) makes the case that a vertically integrated utility (VIU) model provides a tried and true pathway to implement state policy directives and achieve outcomes in the best interests of customers. The political allure of utility restructuring is understandable. It caters to the interests of both libertarian-minded “free market” advocates and those on the left who may be suspicious of VIUs serving a captive customer base. But for present-day leaders of states that have not restructured, it is worth understanding the foundation of the VIU and its comparative advantages amidst ongoing energy policy debates.
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