Are competitive electricity markets coming to Colorado?
This coming Tuesday, March 28, the Colorado Public Utilities Commission (PUC) is hosting a meeting where 10 Colorado electricity providers will discuss a proposal to overhaul the way electricity is bought, sold and delivered in Colorado. This is long-overdue progress. However, it would be a mistake to adopt the plan of self-interested utilities before exploring all our options, some of which might be better approaches for us “ratepayers.”
Each state has its own regulatory and business practices for electricity providers that fall into one of two categories: “government-regulated monopoly” or “organized competitive market.” Colorado is a government-regulated monopoly state, meaning that your address alone determines who provides your electricity, the mix of energy sources, and how much you pay.
Many Coloradans might be surprised to learn that most of the U.S. population lives where there is a competitive wholesale electricity market, and many live where retail customers can choose among electricity providers and rate plans for their community, business, and/or residence. That is, some people actually have energy producers competing to bring them the cheapest and/or cleanest electricity in order to win them as customers. Wouldn’t that be great!
On Tuesday, many of Colorado’s major electricity providers will propose to the PUC that we consider joining the “Southwest Power Pool” (SPP). SPP is a group of states to our east that has pooled all their high-voltage transmission assets for greater efficiency, and they also operate a competitive wholesale electricity market where electricity generators submit bids to sell their electricity into the market. However, people in SPP territory, just like us, don’t get to choose from competing retail providers.
SPP is one of seven state-size or larger power pools in the U.S. called “Regional Transmission Organizations” ( RTOs). About two-thirds of the U.S. population is served by an RTO, but not Colorado, nor most of the West except California. Having an RTO is a requirement for, but doesn’t guarantee, retail-level competition.
In the Texas RTO, retail competition is thriving. Texas has by far the most wind power in the country, and it’s certainly not because Texas is full of greenies. Texans can smell money, and wind is the cheapest form of new electricity, plus it’s cleaner and it’s what many people want. In contrast, investor-owned electricity providers in Colorado, like Xcel, Black Hills, Tri-State and others with government-granted monopoly status, are allowed to protect their expensive and dirty coal plants, which maximizes their profits and transfers a lot of money from us “captive ratepayers” to their shareholders and out-of-state corporate offices.