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Retail Competition in Electricity? Really?

June 21, 2012

In this past Sunday’s Denver Post, former Denver Mayor and Energy Secretary Federico Pena and Adrian Tuck, the CEO of Tendril (a Boulder smart grid company), wrote a column advocating a competitive retail electricity market in Colorado. As I read the column, I was reminded of the Seth Meyers/Amy Poehler Weekend Update sketch on Saturday Night Live. You know, the one where they quote some politician or celebrity making a crazy statement and then look at each other and say: “Really?”

Because just look at their claims:

In the states that have restructured electricity markets “companies and their investors, not ratepayers, pay for poor business decisions.”

Really?  So, if there was a competitive market, and an electricity marketer/supplier made a bad resource decision and went out of business or had to hike prices, electricity consumers would benefit? Really?

Another claim:  “Several studies have shown that restructured, competitive markets in many states bring lower prices…”

Really? So we’re supposed to ignore the recent study by Dr. Kenneth Rose, a Senior Fellow at Michigan State’s Institute for Public Utilities, who recently found that over the past twenty years in the 14 jurisdictions where retail competition has been authorized, “the price gap between the regulated and the retail access states was remarkably steady, showing an approximate 2 cents/kWh advantage in favor of customers in regulated states.” Really?

And what about: “Competition will help consumers with smart meters directly benefit by enabling them to take control of their energy usage costs, respond to changing prices.”

Really? So a competitive supplier would have put the brakes on the costs of the Boulder smart grid project on its own without PUC oversight and discipline? Really?

And  so you’d like to create an electricity market in Colorado that allow the likes of Enron to prey on consumers with little concern for reliability, customer service or cost? Really?

We’ve been down this road before and for a lot of really good reasons (cost, transmission constraints, market power, etc.) our legislature declined to enact retail choice. It would be a waste of time, energy, and money to fight this battle all over again.


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