November 14, 2007—Industrial electricity customers who had hoped deregulation would bring them lower electricity prices have instead seen rising prices and a widening price gap between them and their counterparts in regulated states, according to a study released recently by Power in the Public Interest. The price gap has tripled since 1999, and now industrial customers in deregulated states pay roughly $7.2 billion more annually for their power than their counterparts in regulated states would pay for the same amount of energy, according to the PPI study.
Eleven states (California, Connecticut, Delaware, Maine, Maryland, Massachusetts, Michigan, New Hampshire, New Jersey, Rhode Island and Texas) and the District of Columbia have deregulated electricity prices and their consumers are subject to market prices. In addition, Montana deregulated industrial (but not residential) prices for the period analyzed in the study; it is now returning to a regulated model.
The PPI study, based on Energy Department data, reveals that the gap in prices between the deregulated and regulated states has dramatically widened since 1999, when deregulation began to unfold. Prices in the collective deregulated states have increased in real dollars, increased as a percent of the national average, and increased as a percent of the price in regulated states.
The study analyzed the latest data available from the US Energy Information Administration, Department of Energy, through July 2007, for total delivered price (for generation, transmission, and distribution) to all industrial customers in a state. It measured prices for the 12 months ending in July of each year, through July 2007.
