Electricity customer choice program participation examined

A recent survey of electric utilities conducted by the Energy Information Administration (EIA) has determined after more than 10 years of continuous growth, electricity sales by non-utility retail power marketers have grown only slightly since 2013.

The findings showed 19 states and the District of Columbia allow some commercial and industrial customers to choose competitive retail power marketers while 15 of those states and the District of Columbia allow customers in all sectors to select competitive retail power marketers.

Industry personnel said customer choice programs use competition to lower electricity prices and introduce new electric service products to the market, offering prepaid plans enabling customers to budget electricity expenditures or offer variable priced contracts for large commercial and industrial customers.

The EIA noted that generally, residential customers have paid more per kilowatt-hour through competitive suppliers than non-competitive suppliers, but commercial and industrial customers have paid less. Suppliers are likely to offer more competitively priced contracts to their largest electricity customers.

Utilities purchase energy from the lowest bidders through an auction or request for proposal process for customers that do not buy from competitive suppliers, making it more difficult for retail power marketers to offer lower prices.

In the states that offer customer choice, participation is voluntary. The only exception is in the Electric Reliability Council of Texas, where customers of investor-owned utilities must buy their power from a competitive retail electric provider. Because of this, Texas was not included in the price comparisons of EIA’s report.