Georgia receives a ‘D’ for electricity competition

Georgians are bracing for above-average summer temperatures and corresponding high electric bills, but the Atlanta City Council believes it has the solution.

In an effort to curtail energy costs, “Legislation being considered by the City Council would create new stipulations around the materials used for building and replacing roofs to steer construction away from darker, sun-attracting colors to lighter, reflective colors,” The Atlanta Journal-Constitution reported. “These new ‘reflective roofing standards’ would apply to all new construction—including roof replacements.”

Kudos to the City Council for looking to solve a widespread issue, but it ought to tread carefully. If passed, this kind of proposal could spread to other Peach State cities, and I am not convinced that it is a particularly great idea. For starters, I am generally not a big fan of costly government mandates, and with housing affordability remaining a nagging issue, adding additional regulations that may drive up housing costs further seems problematic. Instead, if the City Council wants to lower energy rates, it should challenge the Georgia General Assembly to foster more competition.

Georgia’s electricity market is an aberration that stands in stark contrast to free-market capitalism, and as a result, it harms consumers. In fact, some of my R Street Institute colleagues published an in-depth study on all 50 states’ electricity markets and graded them based on how well they promote electricity competition. Georgia received an embarrassing “D” grade. So much for being a national leader on energy.

The reason for this nearly failing grade is that Georgia maintains an archaic system that virtually grants electric providers monopolies over vast geographical regions in exchange for increased government regulation from the Public Service Commission. “Georgia offers limited opportunities for competitive choice,” the study reads. “Large customers […] have the option to choose an alternative electricity supplier if they are a new customer and if either their site is already served by an alternative supplier or if the customer makes significant changes to the location that affect usage.” Residential customers—like you and me—are given zero choice whatsoever and are captive to the local electric monopoly.

“Although Georgia Power is required to utilize competitive solicitations to meet future resource needs,” the report continued, “it has recently sought waivers from such requirements, citing ‘urgency’ of resource needs.” What’s more, Georgia has not joined what’s known as a regional transmission organization, which creates interstate partnerships that provide access to reduced-cost electricity.

Meanwhile, more than a dozen states permit consumers to choose their electric provider, and the competition drives prices down. “Since competition was fully implemented, the 14 jurisdictions with retail electricity competition saw prices decline 0.3 percent between 2008 and 2020 compared to a 20.7 percent price increase in the states lacking retail competition,” Pacific Research Institute found.

You can see this at play in Georgia too. Just since 2023, the Public Service Commission has approved six rate increases for metro Atlanta’s Georgia Power customers. Yet they cannot shop around because of Georgia’s monopoly system. If they want electricity, they have only one choice, and if they don’t like the prices or the manner of generation (nuclear, coal, wind, etc.), then tough luck.

There is a much better system than this. Georgia should instead allow consumers to have a choice and let electricity providers compete for their business. This will keep prices lower and let market forces—rather than the Public Service Commission—reward companies. Moreover, Georgia ought to join a regional transmission organization. Studies have shown that joining one can save many billions of dollars. Smaller steps, like enabling the sharing of customer usage information collected by smart meters installed across Georgia Power’s territory, would allow consumers to figure out ways to save money through energy-efficiency measures.

Despite this, a majority of Georgia’s policymakers have yet to show serious interest in electricity competition. Even modest proposals have been met with derision. Earlier this year, Sen. Chuck Hufstetler, R-Rome, introduced a measure to protect residential ratepayers from having to pay for energy costs created by electricity-guzzling data centers. The bill stalled to the dismay of ratepayers. Another proposal by Hufstetler would have reinstituted a consumer advocate to participate in proceedings at the Public Service Commission, but it also stalled.

These are not the only means of reducing electricity costs. Certainly, if you want to install a “cool roof,” then by all means please do. “Individual homes with lighter-colored roofs would see an average of up to 5% savings in energy bills annually,” according to the Journal-Constitution. However, if you want consumer choice and more serious savings, then electricity competition must be a priority.