WASHINGTON (Oct. 19, 2017) – The experience of Midwest states that have restructured their electricity markets demonstrates convincingly that the profound advantages of competitive markets and consumer choice lead to voluntary clean energy growth, according to a new policy brief by R Street Electricity Policy Manager Devin Hartman.
“The Midwest provides an excellent case study for the effects of electricity restructuring,” writes Hartman. “For instance, the adoption of competitive reforms has lead, particularly in Illinois and Ohio, to lower rates and greater consumer options. Unsurprisingly, these states have been able to attract and retain businesses, while putting more money in consumers’ pockets.”
But while Midwestern policymakers have a great homegrown lesson from which to learn, Hartman notes that obstacles remain. Midwestern monopoly-utility states could take a step in the right direction if they enable third-party power purchases and competitive procurement, but only comprehensive restructuring will put them on a robust path for economic competitiveness.
Indeed, as the market advantage grows, Hartman notes that monopoly states will face increasing pressure in the region from savvy and politically influential customer groups to introduce competition and customer choice. Since competitive markets have unquestionably outperformed the monopoly model both nationally and in the Midwest, the sooner and more comprehensively policymakers respond, the more the benefits of competition and choice will flow through the broader Midwest—and, if they are willing to try, to other states across the country.
“The structural advantages of states like Illinois and Ohio will continue to grow, as large power consumers increasingly express a clear preference to build and maintain facilities in states that permit retail choice,” notes Hartman. “But states everywhere could accelerate their economic advantage by protecting and strengthening markets and consumer choice, and especially by resisting subsidies for unprofitable power plants. They could also do so by ‘quarantining the monopoly’ to eliminate the ability of a distribution monopoly to obtain anticompetitive advantages for its affiliates. With great models to emulate, the question is why isn’t this happening more?”