This is one half of a point-counterpoint discussion — read the other half here.
Consumers free to choose products and suppliers and suppliers free to provide products to consumers are the indispensable foundation of any free market. Yet, most states still use government command and control regulation in the form of state-imposed monopoly electricity utilities to both generate electricity and to deliver it. But not Pennsylvania.
Pennsylvania ended government-imposed monopolies for the generation of electricity in 1996, though the delivery of it remains a government monopoly. In Pennsylvania free enterprise and competition in electricity generation products had produced more than 100 different companies competing for the business of families and commercial accounts by offering hundreds of different electricity products.
You can see for yourself by going to the excellent www.papowerswitch.com that is operated by the Pennsylvania Public Utility Commission. Type in your zip code and see the suppliers and their products competing for your business.
How are electricity products offered by competitive companies different from each other? Companies compete for business based on the lowest price and much more.
For example, is the price fixed or variable? Is the length of the supply contract month-to-month or one year or three years? A three-year power product versus a month-to-month product differ as much as a 30-year mortgage does from a variable rate mortgage product. To call them the same thing is a big mistake!
And electricity generation products differ in many other ways other than price or length of contract. Is the generation technology used to generate the electricity burning fossil fuels or utilizing renewable energy, with significantly different environmental and public health impacts? Is the location of the generation in Pennsylvania or elsewhere in our regional power grid? Does the electricity supplier offer different prices for using electricity at different times, such as free electricity on weekends? Does the electricity supplier aggregate and pay market prices to owners of home solar systems and home batteries for providing power to the grid during periods of high demand, when wholesale prices can spike for a few hours?
To focus just on the environmental and public health difference of electricity products, some electricity products cause substantial pollution, including heat trapping carbon dioxide, as they are generated mainly by burning coal and gas. Other products use mainly renewable energy like hydro, wind and solar that cause no air or climate pollution when generated.
Electricity products, therefore, differ tremendously on the basis of many factors!
Now consumers can and do choose the electricity product that best meets their needs and their values. That is much better than the old Soviet style system of government monopolies imposing on consumers one size fits all!
John Hanger served on the Pennsylvania Public Utility Commission from 1993 to 1998.