It makes sense in this age of expanding digital offerings that consumers want choice. The days of top-down markets are rapidly dwindling.
Even the retail delivery of electric power is succumbing to this trend. What was once a monolithic structure is breaking into smaller fragments of the larger whole. Competition is the driving force.
According to a recent study released by energy consulting firm Distributed Energy Financial Group (DEFG), markets that have embraced a competitive structure are thriving compared to those that have not.
The Annual Baseline Assessment of Choice in Canada and the United States (ABACCUS) was released in November 2001. According to the study, states that have opened their electricity markets to retail competition have seen a surge in consumer-driven products. It finds that well-structured competitive markets foster the introduction of new products and services that are not available in traditional monopoly areas.
Nat Treadway, DEFG’s managing partner and lead author of the report, said that competition helps keep costs down and reduces pressure on the grid by giving everyone the incentive to manage electricity use.
“Competition has prompted retail electric suppliers to deliver a growing portfolio of innovative energy management solutions to consumers, and consumers are responding,” he said.
The study identifies the states that are leading the way with policies that foster competition. For the fifth year in a row, Texas tops that list, followed by New York, Illinois, Pennsylvania, Alberta (Canada), Connecticut, and Maryland.
In Texas, users can visit an online market, www.powertochoose.org, to compare and shop for competitive rates.
DEFG said the expansion of the smart grid and the growing use of smart meters and other innovative communication and control devices are a natural fit for competition because they make it easier for suppliers to develop innovative pricing and service options. Together, these changes help address the larger social and political concerns of clean energy, efficiency and reasonable pricing.
Along those lines, the ABACCUS report finds that competitive markets contributed to assistance programs for low-income consumers, greater energy-efficiency and demand-response programs, and more investment in renewable power.
Of note, the report highlights how nearly 80 percent of U.S.-installed wind capacity is located in regions with competitive markets, even though these regions have only 44 percent of the nation’s wind-energy potential.