This piece was originally published in the January/February 2020 issue of electroindustry.
The Power of Choice
Florida voters could face a difficult choice at the ballot box in November 2020: whether or not to completely overhaul the state’s electric utility market. Florida is currently a “vertically integrated” market, meaning electric utilities own generation, transmission, and distribution assets. Those that own generation and transmission supply to their private distribution networks while also selling electricity to other distribution utilities through bilateral contracts. The consumers (Florida residents and businesses) have little or no choice in who provides their power.
A current ballot initiative could change all that. A Petition for Electricity Choice in Florida is seeking enough signatures to allow Floridians to vote whether or not to open up the state’s wholesale (generation and transmission) and retail (distribution) markets to competition. As of December 2019, the petition has nearly 550,000 signatures.
The Florida proceedings are worthy of the industry’s consideration as a microcosm of a trend in electricity markets: consumer choice. Today, most of the country’s energy markets are deregulated, and market overseers rely on generator bids to establish prices. Florida’s move in this direction would not be unique. What is of far greater interest is what might happen at the retail level. Even in deregulated markets, allowing consumers to choose who provides their electricity is rare, but it is becoming less so.
According to the U.S. Energy Information Adminisration, as of November 2018, 13 states have residential retail choice programs. While the total number of participants in those programs has declined recently, more states are considering implementing such programs, and current programs are considering expanding (i.e., to include more retail choice capacity or to include non-residential customers).
The concept of customer choice expands far beyond the supplier. For example, the RE 100 is a group of well over 200 U.S. companies that have pledged to purchase solely renewable energy. Companies like IKEA, Apple, Kellogg’s, and Morgan Stanley are on the list. With enough purchasing power to dictate preferences, even in non-consumer choice distribution networks, these companies are moving markets.
Virtually every state now allows consumers to make at least some decisions about the energy they consume, beyond the simple question of quantity. With advanced metering infrastructure and time-of-use opt-in clauses, optional demand response programs, and net metering, the concept of consumer control is becoming more and more prevalent. Demand for equipment and systems that can efficiently and effectively enable that control will continue to grow. Smart meters, distributed energy resource management, and advanced distribution management systems are just some examples.
I do not know what Florida’s final ballot wording will look like come November. Nor can I predict the “perfect” balance between competition and monopoly in energy markets. But I do know that energy consumers collectively have more energy choices than ever before. How users apply that power is up to them. ei