How Competitive Energy Supply Options Become Available
About Competitive Energy Markets
Competition is the engine that drives our economy. Constellation and its Exelon parent company is the leading energy industry advocate for competition in the U.S. power and natural gas sectors; We believe that the demand for and supply of energy are best determined through fair and competitive markets. Well-designed competitive markets deliver better results than either traditional monopoly markets or partly restructured markets:
- More efficiency
- Greater innovation
- More diverse investments, products and competitive suppliers
- Improved customer service
- Improved climate for investment in renewable energy
Benefits of Competitive Energy Markets
Competitive energy markets are the best way to keep prices as low as possible and create a climate that encourages economic growth, job creation and innovation. The technological innovations that led to the development of domestic shale gas in the last decade, lowering gas prices across wholesale and retail markets, are a prime example of the benefits of restructured markets.
Fundamentally, competitive energy markets give customers a choice: the ability to choose a lower cost energy supplier, to manage their energy use, to become more efficient, or to choose green energy.
Prior to restructuring, customers had to buy electricity and natural gas from one utility company. As part of a monopoly energy market, utilities were then able to set their own prices for energy supply, typically with state regulatory approval.
History of Competitive Markets
Competitive energy markets began developing in the 1980s for natural gas and in the late 1990s for electricity following Energy Policy Act of 1992 which paved the way for competitive wholesale and retail electric markets.
Today, businesses can choose from a range of relatively simple, to very complex, energy management strategies that can be used to gain a competitive advantage in their respective markets. Homeowners and renters can choose from a range of options that provide price protection, savings, and environmental benefits.
In competitive electricity markets, regulated utilities continue to manage power transmission and distribution. Competition centers on the electricity commodity and other products and services. The advent of competition has no impact on distribution system reliability, which continues to be the responsibility of the local regulated utility.
In states without retail competition, government regulators set electricity prices. Consumers and businesses often have less access to green energy options and new and innovative products and services in such markets.
The Future of Competitive Markets
Many states have yet to embrace a competitive market design, and even in competitive markets the ability to compete can be frustrated by regulatory and policy initiatives on a range of fronts.
Even though competition is delivering the anticipated results, many restructured markets continue to be at risk. Constellation and Exelon continue to lead advocacy for genuinely competitive frameworks in wholesale markets, retail supply, renewables, carbon and utility procurement.