Competitive Power Market Report notes positive findings.
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Press Release Summary:
Provided by Electric Energy Market Competition Task Force, Report to Congress on Competition in Wholesale and Retail Markets for Electric Energy identifies strengths inherent in competitive wholesale markets such as greater transparency that positively impacts transmission, clear price signals, and wholesale customers' ability to seek least-cost supply options. Report addresses need for more open access to transmission, which would create more competitive options for wholesale customers.
Original Press Release:
EPSA Notes Positive Findings In Task Force's Report On Competitive Power Markets
Long-awaited Report Highlights Advantages of Transparency That Has Positive Effects on Price Signals, Customers' Ability to Shop for Least-cost Power
WASHINGTON, D.C. - John E. Shelk, President and CEO of the Electric Power Supply Association (EPSA), today highlighted the positive findings regarding the state of competitive markets contained within the Electric Energy Market Competition Task Force's "Report to Congress on Competition in Wholesale and Retail Markets for Electric Energy." The Energy Policy Act of 2005 created the Federal interagency task force and mandated its report.
"The report correctly identifies some of the strengths inherent in competitive wholesale markets, such as greater transparency that positively impacts transmission, clear price signals and wholesale customers' ability to seek 'least-cost supply options,'" Shelk said. "As the report notes, less transparency in the non-organized markets may result in less efficient dispatch.
"The report also addresses the need for more open access to transmission, which would create more competitive options for wholesale customers. The availability of transmission is critical to determining where new investments in generation will be made.
"We're also pleased that the report notes the success of competitive markets in restructured states where the markets have emerged from their transition periods and competition is robust. In those states, we're seeing far greater efficiency in generation, and reduced rates for residential, commercial and industrial customers. The remaining regions be permitted to emerge from their states of transition and allow the market forces to take full effect."
The Electric Energy Market Competition Task Force also noted that:
Traditional regulation "does not provide the same market discipline that effective competition provides. Under regulation, ratepayers may bear the risk of mistakes resulting from where and how investments are made. In competitive markets, the penalties for such mistakes fall on management and shareholders. Future accountability for investment decisions can lead to better decision-making at the outset." (p. 73, emphasis added)
About 74 percent of capacity additions were made by non-utility power producers between 1996 and 2004. (p. 35)
The transition period from the traditional regulatory model to robust competitive markets takes time. According to the report, "[e]xperience with restructuring in other industries indicates that consumer switching from a traditional supplier to a new one can be a slow process. It took 15 years before AT&T lost half of its long-distance service customers to alternative suppliers." (p. 108, emphasis added)
Uniform price auctions create "strong incentives for entry by low-cost generators that will be able to displace high-cost generators in the merit dispatch order." (p. 70)
EPSA Notes Positive Findings in Task Force's Report on Competitive Power Markets.PDF
CONTACT: BILL HOLBROOK
(202) 349-0143
EPSA is the national trade association representing competitive power suppliers, including generators and marketers. These suppliers, who account for nearly 40 percent of the installed generating capacity in the United States, provide reliable and competitively priced electricity from environmentally responsible facilities serving global power markets. EPSA seeks to bring the benefits of competition to all power customers.
