Retail Competition Studies

ERRC Releases Annual Baseline Assessment of Choice in Canada and the U.S.
In early December, the Energy Retailer Research Consortium (ERRC), an independent research consortium that supports retail energy choice, released the Annual Baseline Assessment of Choice in Canada and the United States (ABACCUS) report, which identifies which North American competitive electricity markets are successful and why. In compiling the rankings, ERRC considers the market structures, business practices and regulatory policies that support retail electricity choice and include approximately 25 important dimensions of service. The facts for each state were assessed, scored, weighted and summed, and then ranked accordingly. The level of progress was then assessed based on qualitative input from a team of advisors with input from eight public utility commissions.

The report also presented recommendations based on public policy choices that support the application of competitive forces. Chief among these is the design of default service—which refers to the basic retail rates established to provide a transition from regulated rates to market-based electricity prices and contracts. The design and implementation of default service is a significant single issue affecting the success of retail choice, according to the report, because when regulators try to address all customers’ needs, set prices artificially below cost, or bundle risks and spread the risk premium to all consumers, then it is unlikely that REPs will enter the market. The report recommends using a more market-reflective rate in the near-term for default service and excluding the premiums associated with longer-term fixed prices to allow customers to better respond to price changes.

ELCON Policy Brief Recommends Different Treatment of C&I Customers in EE Policy
In mid-December, ELCON (the Electricity Consumers Resource Council) released a Policy Brief on Energy Efficiency, entitled “Financing Energy Efficiency Investments of Large Industrial Customers – What is the Role of Electric Utilities?” that held that regulatory policies mandating large industrial customer participation in utility energy efficiency programs may result in less energy efficiency improvements or improvements at higher than necessary costs.

ELCON President John Anderson said that America’s manufacturers support energy efficiency and have invested billions of dollars to make their plants as energy efficient as possible however they don’t support government mandates to achieve energy efficiency that treat all classes of users alike because there are differences in achieving energy efficiency in the industrial sector and in the residential sector. 

ELCON recommended that large industrial customers should be allowed to demonstrate that they have a self-directed energy efficiency (EE) program and should be eligible to opt out of any obligation to pay tariff-based surcharges used to fund utility programs. Alternatively, they should receive "dollar-for-dollar credit to offset or bank revenues collected in any applicable tariff or tariff rider used to fund the costs of utility EE programs."

Customers that opt out of utility EE programs should not be allocated the costs associated with participation by other customers, ELCON said. "The substantial expenditures and investments made by opt-out customers at their own expense also contribute 'system benefits,' yet the costs of such benefits are not allocated to other customers. Opt-out customers should only be assessed charges for system costs if they are themselves reimbursed for the costs of providing system benefits that are shared with other ratepayers," the brief said.

In the Policy Brief, ELCON made 10 recommendations for the role utilities must play in financing energy efficiency investments of large C&I customers.

To read the full Policy Brief, click here. To read a previous Policy Brief entitled Utility Energy Efficiency Programs:Too Cheap to Meter? click here.

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