Posted tagged ‘competition’

Electricity Prices Highlight the Benefits of Markets and Choice

March 28, 2013

Four of the six New England states (CT,ME, MA and NH) had lower average retail prices for residential electricity customers in January of 2013 than they did in January of 2012 (chart below).

Chang in Avg Retail Price of Electricity

Most of that is a result of the increasing sales into the region’s electricity market  of electricity generated by natural gas which is priced lower than the electricity generated using other sources.  The decline in the average price in NH is smaller than in some other states but it could have been, and could still be,  larger if retail competition in the residential electricity market takes hold.   The chart below shows the average cost of retail electricity for residential customers in the continental United States in January of 2013.  New Hampshire and all of New England have among the highest average rates but based on the contract information from the largest competitive suppliers of residential electricity in New Hampshire, the average price would be significantly lower (at least until November of 2013) for those who choose the lowest rates available from competitive suppliers (other higher rates are available that let customers choose to purchase a higher percentage of electricity generated from ‘green” sources).

Avg Residential Price of Electrictyby State

I was going to make this a much longer post and include a discussion of why the warnings by some about an “over-reliance” on natural gas in the region are overstated but not inaccurate (the natural gas pipeline limitations to the region are real but more likely to be remedied than not with increased natural gas usage in the region) but I will save that for another day.  The reputation and belief in free(er) markets and competition have taken a beating over the past several years so  for now I am just going to enjoy highlighting  of  one of their recent successes.

The Coming “Consumerism” of Residential Electricty Customers

January 9, 2013

It is no secret that the price of electricity in New Hampshire in relation to prices in most of  the U.S. is high.  That is true for all types of consumers of electricity, residential, commercial, and industrial, but prices for industrial customers were especially high compared to prices across the country.  New England is known for high energy prices but New Hampshire’s electricity prices compare more favorably to the region than they do to other regions and states.  Industrial consumers of electricity in NH, however,  seemed to pay relatively higher prices in comparison to industrial consumers across New England.  Over the last half of the past decade that  changed.  Either because of competition for industrial customers, special rates, or other reasons, the relative price of electricity for industrial customers in NH fell significantly in relation to average prices in New England and are now (through 2011) just below the regional average.  For residential consumers price trends are different.  Compared to the New England average, prices per kwh were relatively low for NH’s residential consumers, but they have been rising and are now (through 2011) just above the New England average.

NH Electricity Prices as a Pct of NE

The price competition that has benefited industrial consumers of electricity in NH is likely partially responsible for the rising prices and higher relative prices facing residential customers. Prices for residential consumers seemed to rise more just as  prices for industrial consumers fell.   As a result, as is being reported in a number of media outlets, competition is becoming more robust in NH for residential consumers of electricity.  That will eventually result in lower or more slowly growing average electricity prices for NH’s residential customers.   Competition does lower prices but it will only do so  for those who actively  participate in the competitive market.  Just like a car dealer,  electric utilities will look for someone to pay the full “sticker price” for every consumer who gets a “deal”.


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