The number of customers participating in retail choice programs peaked at 17.2 million customers (13% of total residential customers) in 2014 and has since declined, reaching 16.2 million customers (12% of the national total) in 2016 and 16.7 million customers (13% of the national total) in 2017, the Energy Information Administration (EIA) reported on Nov. 8.
In its “Today in Energy” report, the EIA notes that currently, 13 states and the District of Columbia have active, statewide residential retail choice programs.
In Texas, the retail choice program is mandatory under state law in the part of the state operated by the Electric Reliability Council of Texas (ERCOT). Retail customers in ERCOT, which covered 87% of residential customers in the state in 2017, must either choose a competitive supplier or be assigned one.
“Four other states — Michigan, Nevada, Oregon, and Virginia — each have a form of limited retail choice that is mostly available to non-residential customers,” the report noted.
Outside of Texas, Ohio has the highest number of residential retail choice customers, followed by Illinois and Massachusetts, the EIA reported. “These three states have had varying experiences with program participation during the past decade. In recent years, Massachusetts has seen steady growth in retail choice participation, while conditions in Ohio have caused participation to level off and in Illinois to decline.”
Ohio started deregulating its electricity industry in 1999 and launched a full retail market after an almost 10-year testing phase. At the same time, investor-owned FirstEnergy “sought to do away with a long-standing discount from the 1970s that benefited households with electric heating systems.”
As of 2009, FirstEnergy limited the program to only existing households and slowly raised rates for these customers during the next decade, according to the EIA report. “This near-simultaneous shift in prices and the launch of the market most likely led to the sharp increase in residential retail choice customers in 2009. Since this early growth, retail choice in Ohio, although still popular among residential customers, has slowed and even seen a small decline in recent years.”
The EIA said that between 2009 and 2013, Illinois had one of the highest growth rates in retail customer choice among residential customers, in part because of municipal aggregation and a steep drop in natural gas prices.
Cold weather in 2014 leads to one-time surcharge for customers in Illinois, Ohio
In the wake of bitterly cold weather in early 2014, FirstEnergy Solutions, a significant retail power marketer in Illinois and Ohio, said it would impose a one-time surcharge of $5 to $15 on all its customers in those states in order to cover extra costs billed in the PJM regional transmission area, the EIA noted. This surcharge led to a broad probe by the Public Utilities Commission of Ohio.
FirstEnergy Solutions ultimately decided to exclude its almost three million residential customers from the charge, the EIA noted.
In the wake of this event, residential customers in Illinois switched back to their full-service providers at a rate of 16% in 2015 and 18% in 2016. “As of 2017, retail choice providers serviced 35% of total residential customers in Illinois, down from the peak of 57% in 2014. In Ohio, the switchback rates were lower at 3% and 2% in 2015 and 2016, respectively,” the federal agency reported.
Association report examines retail electric price trends in markets
A report issued by the American Public Power Association earlier this year said that increases in retail electric prices in states with deregulated electric markets and regulated states were about the same between 1997 and 2017, although customers in regulated states saw a slightly higher percentage increase in rates.
The report, “Retail Electric Rates in Deregulated and Regulated States: 2017 Update,” was authored by the Association’s Paul Zummo, Director of Policy Research and Analysis.
The report, which looked at data from the EIA, calculated the weighted average retail rates for regulated and deregulated states.