In 1997, Pennsylvania embarked upon what would become a 13-year process of electric utility deregulation. The passage of the original 1997 bill, and the regulatory changes that transpired afterward, came to a conclusion in 2010. In that year, two major changes swept PA’s electricity markets:
- The decoupling of generation services from the major electric utilities in Pennsylvania, resulting in the establishment of a new, truly private and competitive electricity generation industry in the Keystone State. In time, this would make Pennsylvania the largest electricity-exporting state in the nation.
- The establishment of a consumer marketplace where individuals could purchase electricity from the source of their choice, ending the monopoly of electricity sales by PA utilities once and for all.
With deregulation, PA utilities assumed the role of electricity distribution providers rather than the role of the direct sales they had monopolized for generations.
However, their continued authority to link the “default provider” (often a subsidiary of the utility itself) with the consumer remained at the core of the system, establishing one final barrier for those companies not connected with the regional utilities. This problem remains the largest impediment to Pennsylvania assuming its proper place as the truly free and competitive electricity leader in the United States.
As PA consumer advocates have noted, “…residents typically buy their power from the regulated distribution utility that happens to serve the area in which they live. If a customer wants to switch from this default option to an alternative supplier, the onus is on the customer to take that step. This setup dissuades customers from shopping for other electric plans that could save them money.”
With this in mind, the University of Texas recently released its grade of the 50 states by the level of “electric competition.” Pennsylvania was given a grade of B, with only four states receiving the coveted rating of A. The researchers wrote, “Actions Pennsylvania could take to improve its competitiveness score within the framework of this report includes allowing decoupling of utility revenue from sales to remove a disincentive to invest in energy efficiency.”
To learn more about the report, and recommendations for improving competition in our nation’s energy markets, please sign up for the national webinar on this subject, scheduled for Wednesday, October 27 at 11:00 AM ET. This webinar is hosted by our national organization, the Conservative Energy Network (CEN). You can sign up for the webinar here.
Polling by CEN has consistently found that three-quarters of Americans favor a new electricity system that benefits the environment, accelerates the availability of new technology, and creates more choices by opening markets to competition. Consumers want the ability to choose an electricity provider that best meets their needs, rather than relying on a single monopoly utility.
Download Links:
PDF: CEN Press Release on the Electricity Competition Scorecard
PDF: The State of Electric Competition in Pennsylvania: Explaining the Overall Score of B