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Ohio Consumers’ Counsel Analysis Shows Price Declines in States with Retail Electricity Competition

By: Bill Massey |

Nine of the 12 states that saw residential electricity price declines from 2008 to 2013 were states that allow retail electricity choice and competition, according to an analysis of Energy Information Administration data compiled by the Ohio Office of Consumers’ Counsel.

Connecticut, Delaware, the District of Columbia, Illinois, Maryland, Massachusetts, Maine, Rhode Island and Texas all experienced residential price declines ranging from less than a penny to 2 cents per kilowatt-hour (kWh) during the time period examined. Florida, Louisiana and Nevada, all price-regulated states, rounded out the list of states that saw price declines (less than a penny per kWh each). All other states examined saw price increases during the five-year period, according to the analysis.

Interestingly enough, the state of Michigan, which reregulated its market and denied choice and competition to all but 10% of electricity demand, saw the highest growth in residential electricity prices except for Hawaii. The analysis shows that prices increased nearly 4 cents/kWh in Michigan after the state reregulated its market in 2008.

The independent review shows that competition works in the best interests of electricity consumers, and aligns well with COMPETE’s own analysis of EIA electricity pricing data.

COMPETE’s analysis of EIA pricing data shows that residential customers in states with restructured competitive retail markets paid 5.8% less for electricity, on an inflation-adjusted basis, in 2013 than they did in 1997, while residential customers in states that retained the monopoly utility pricing model paid 4.3% more than they did in 1997.

State policy makers would do well to take these facts into account when pondering the efficacy of their state’s regulatory model.