Background on electricity choice and competition:
- Colorado is a "vertically-integrated monopoly state"
- We have no choice of electricity provider. - Electricity generation is not a "natural monopoly"
- There are many competing suppliers in some states. - We would benefit from both wholesale competition and retail choice.
- More than 30 states have wholesale electricity markets.
- Generators bid their electricity into the market.
- The lowest bids win. Natural gas and renewable energy
usually beat coal on price. [cost comparison] - Renewable energy (wind and solar) gets cheaper every day.
Texas is leading the nation on wind.
- At least 20 states have retail choice of some type. Two examples:
- Texas: Individual choice (consumer chooses from competing electricity providers). [Retail choice in Texas]
- Illinois: Individual and community-level choice, with opt-out provision. [Retail choice in Illinois]
Preliminary Conclusions:
- We need a "Regional Transmission Organization" (RTO) and wholesale electricity markets in the West.
- RTOs pool the high-voltage transmission assets of many utilities for greater efficiency and lower cost.
- RTOs are independent non-profits that run competitive wholesale markets.
- Many RTO states also have some type of retail competition and choice of electricity provider.
- For more, see "Overview of the U.S. electricity system"
- Energy monopolies are outdated. Poles and wires are still natural monopolies, but not electricity generation.
- Monopolies are incompatible with retail-level competition. They should have to compete too.
- Doesn't apply to electric co-ops and municipal utilities, who have some control over their energy destiny.
- This is not a radical idea – having a choice of electricity provider is just unfamiliar to Coloradans.
- Colorado is in an excellent position to learn lessons and best practices from other states.
INTERMEDIATE LEVEL: "Why Restructure Monopolies?"
MORE ADVANCED: "The Case to Study Retail Electricity Choice"