THE FACTS ON DEREGULATION AND ‘ELECTRICITY CHOICE’
The electric power industry began restructuring in the late 1990s. However, according to a 20-year study published by the Electric Markets Research Foundation (EMRF) in February 2016, there is little evidence that retail choice has yielded significant benefits. Here are the facts:
FACT: CHOICE DOES NOT LOWER RATES.
States that have adopted retail choice have higher electricity prices than those in other states. Here’s an American Public Power Association study that lays out the facts.
California’s experiment with deregulation was an epic disaster for the state. Residential customers in California have seen rates increase 35 percent between 2002 and 2013 while Nevada’s rates have decreased 25 percent during the same period. It cost the state’s ratepayers over $40 billion to fix.
New York deregulated in the 1990s, and according to the U.S. Energy Information Administration, New York had the fourth highest average electricity prices in 2014 6 cents higher than Nevada’s rates. Over a 24-month period, New York customers’ bills were raised by averages of $500 for electricity.
Texas deregulated in 2002, and since then Texans in deregulated areas have consistently paid more for power than those in regulated areas. All told, Texans living in deregulated areas would have saved more than $22 billion since 2002 had they paid the same prices as those outside deregulation.
FACT: LOW INCOME CUSTOMERS WERE LEFT OUT IN THE COLD.
Getting rid of the utility model also gets rid of important consumer protections for low-income people, the disabled and seniors.
In 2012, a Public Utility Law Project evaluation that showed that among New York customers who switched to alternative suppliers, 84 percent of residential electric bills and 92 percent of residential gas bills were higher that they would have been with their utility.
A study conducted in Pennsylvania showed that more than 70 percent of low-income customers in that state who chose an alternative supplier paid more.
Natural gas supplier plans were studied in Illinois by the Citizens Utility Board study, which showed that since 2003, 94 percent of those plans resulted in higher prices for residential customers.
FACT: FRAUDULENT ENERGY SUPPLIERS CAN RUN RAMPANT IN AN UNREGULATED ENVIRONMENT.
In the worst cases, fraudulent behavior by suppliers included falsely promising bill savings, switching customers without their consent, and high pressure sales tactics, such as door-to-door marketing to low-income, elderly and non-English speaking customers.
In New York, the state Public Service Commission revoked the licenses of five energy suppliers. The number of consumer complaints increased almost six fold from 2010 to 2015 when the number was more than 5,000.