National Retail Market Size Surpasses Three Wholesale Markets

February 2004

Contrary to some claims, restructuring of retail electric markets has proved very successful on a national basis, with over 50,000 MW of customer load now served by competitive suppliers. Retail electric markets are evolving rapidly to provide better prices and innovative services and technologies to customers in Texas, the Northeast and Great Lakes regions in the US.

A new KEMA, Inc. analysis concludes that over 52,000 MW of estimated peak customer electricity demand is now being competitively served -- more load than the entire wholesale electric markets serving New England, New York or California. KEMA reports that the Texas market leads the country in terms of customer load migration, new entrants and choice of competitive offers. Of the 52,000 MW of customers choosing competitive suppliers nationwide in 2003, Texas accounted for approximately 17,000 MW. By comparison, Illinois, California, New York, Pennsylvania and Ohio each accounted for over 3,000 MW.

Market Rules Can Support or Undermine Customer Choices

The retail electric choice market is now large enough and disperse enough that a single state action will not undermine the national trend. However, many states are in the process of making substantial changes in retail market design, for example: Maryland, Massachusetts, Michigan, New Jersey, New York, Ohio, Pennsylvania, Texas, Virginia and California.

In markets where regulators have tried to open choice to customers, but market rules prevent suppliers from offering the menu of price, service and technology options in other markets, regulators should focus on what fundamental attributes of their market rules are blocking progress. "Waiting it out" is usually a strategy that results in limiting choices and fomenting dissatisfaction among customers.