In the rapidly evolving energy landscape, competition remains a fundamental driver of affordability, reliability, and innovation. At last week’s winter meeting of the National Association of Regulated Utility Commissioners (NARUC), federal energy regulators and industry leaders, including Electric Power Supply Association President and CEO Todd Snitchler, emphasized the crucial role that competitive markets play in meeting U.S. energy needs as AI, electrification, and manufacturing growth put more pressure on the power supply. The conference drew more than 2,200 attendees, gathering state and local public utility commissioners and their staff as well as industry representatives and policy experts across the energy footprint.
With growing energy demand, shifting policies, and new technological advancements, maintaining market stability and investor confidence is more important than ever. However, regulatory uncertainty threatens to disrupt investment and slow progress toward a resilient and cost-effective energy future.
The Value of Competitive Markets
Competitive markets have consistently lowered costs for consumers, improved reliability, and driven efficiency across the grid. As Snitchler highlighted:
“Competitive markets shift financial risk away from consumers and onto private investors, where it belongs. This ensures that customers aren’t burdened with the costs of failed investments and cost overruns.”
“Markets have delivered remarkably well across the footprint—whether in affordability, reliability, or emissions reductions.”
“People have adjusted to the new normal of lower electricity prices, but those cost savings are real and significant. Competitive markets have been key in driving those reductions.”
Fellow panelists cited tangible benefits from various market structures. FERC Commissioner David Rosner pointed out that regions with well-structured competitive markets see massive annual savings, such as:
- PJM: $3-4 billion in consumer savings per year
- MISO: $5 billion per year
- Western Energy Imbalance Market: $6 billion over the past decade
Beyond cost savings, competition has fueled innovation and efficiency. Carolyn Comer, president of Shell Energy North America, underscored how market competition ensures better outcomes for both consumers and investors:
“Competition is essential to driving efficiency and affordability. When companies compete, they are incentivized to innovate, lower costs, and provide better services. That ultimately benefits consumers and strengthens the market.”
She also pointed out that market competition leads to smarter investment decisions:
“Competitive markets ensure that capital flows to the most efficient and reliable resources. Investors are looking for long-term certainty, and competition helps create a structure where the best solutions rise to the top.”
And American Clean Power Vice President of Transmission and Electricity Markets Carrie Zalewski stated:
“Markets are great. By design, they’re meant to invoke competition… and that brings things like innovation and, ideally, downward pressure on costs.”
This competitive edge ensures that market-driven solutions remain the most efficient way to balance reliability, affordability, and decarbonization goals.
The Role of Price Signals in Market Efficiency
While competition has created cost savings for consumers in the long run, competitive electricity markets rely on accurate price signals to efficiently balance supply and demand, incentivize investment, and ensure grid reliability. Higher prices, while they can be a pain point for consumers, serve a critical function in driving new supply and rewarding resources that provide reliability during periods of stress. In PJM, for example, recent years have delivered historically low prices that, while positive for ratepayers when it came to monthly bills, led many power generating units to retire.
As Todd Snitchler explained:
“Prices are signals… When prices rise, it tells investors there’s an opportunity to build and supply more power to the market.”
Several panelists echoed this sentiment, noting that price volatility in competitive markets is not necessarily a failure but a mechanism that encourages innovation and resource adequacy.
Key roles of prices in competitive markets:
- Attract new investment – Rising prices indicate that additional capacity is needed, spurring new generation and infrastructure investments.
- Encourage efficiency and flexibility – Generators respond to price fluctuations by improving efficiency, adopting new technologies, and optimizing resource dispatch.
- Ensure reliability – During extreme weather or peak demand periods, price spikes compensate resources that provide critical grid stability services.
As new resources come online, the market again adjusts to reflect a higher supply.
Richard Dewey, president of the New York Independent System Operator, emphasized:
“If we artificially suppress high prices, we remove the very incentive that drives investment in new resources. Investors need confidence that they will be rewarded for making long-term commitments.”
However, price signals only work if markets are allowed to function properly. Regulatory interventions that cap prices or disrupt market pricing structures can distort investment incentives, leading to insufficient generation and higher long-term costs for consumers.
The Investment Challenge: Regulatory Stability is Key
As energy demand surges, driven by data centers, electrification, and emerging technologies, the need for new infrastructure investment has never been greater. However, investors require long-term certainty to commit billions of dollars to new projects.
“At the very time we need investments to be flowing fairly dramatically, we find ourselves in very uncertain situations, which makes investment difficult,” said Snitchler. He added, “If the load growth projections are even close to correct, we’re going to need billions of dollars in new generation, transmission, and distribution infrastructure—all of which ultimately impacts consumer bills.”
Comer reinforced this concern, stressing that investors require regulatory stability to ensure confidence in long-term projects:
“The more frequently markets get tweaked, the harder it is to make long-term investment decisions. We need a predictable regulatory framework to keep markets functioning efficiently.”
Without clear and consistent rules, investors face uncertainty, leading to capital hesitancy and higher costs for consumers.
The Role of Auction Timing in Market Certainty
A significant challenge for investors and market participants is the timing of capacity market auctions, which determine how and when resources are procured to meet future demand. Uncertain or inconsistent auction schedules can lead to investment delays, affecting market efficiency.
Snitchler highlighted this issue, emphasizing the need for predictability in auction timing:
“If the timing of capacity auctions keeps changing or gets delayed, it disrupts investment decisions. Investors need a clear timeline to plan, secure financing, and build resources in time to meet demand.”
Several panelists echoed concerns about auction uncertainty, particularly in regions like PJM, where capacity market reforms and shifting auction schedules have led to market instability.
“When auctions are delayed or market rules change frequently, it creates hesitation among investors. They don’t know if they’ll recover costs or when they should commit capital,” said Dewey.
Market participants emphasized that predictable, transparent auction schedules are essential for ensuring that competitive markets function properly and continue to attract investment.
State Policy and Market Uncertainty
One of the biggest threats to competitive markets is regulatory uncertainty caused by shifting state policies. While states have the right to tailor energy policies to their priorities, inconsistency can disrupt investment and market efficiency.
Snitchler put it directly:
“States, if you break it, you bought it.”
This means that when states enact policies that increase costs, they must take responsibility rather than shifting the blame to RTOs, federal regulators, or other states:
“Looking to blame other states, an RTO, or a federal regulator for the costs of state policies is probably not the leadership that is going to be required for us to get through this energy expansion,” he added.
The challenge is to balance state goals with regional market efficiency to maintain affordability, reliability, and long-term investment certainty.
The Path Forward: Certainty Fuels Competition and Growth
For energy markets to continue delivering value, regulators and policymakers must prioritize stability, transparency, and predictability. Snitchler summarized this point:
“We need a reasonable degree of certainty—not absolute certainty—to attract investment. Right now, we’re facing too much uncertainty, which makes it harder to get capital flowing where it’s needed most.”
By fostering competition, ensuring regulatory stability, and coordinating policy goals across states and markets, policymakers can attract investment, lower consumer costs, and drive innovation—ensuring a reliable and affordable energy future.
Final Thoughts
The energy sector is at a critical crossroads. Competitive markets have delivered enormous benefits, but regulatory uncertainty—including inconsistent auction timing and artificial price caps—threatens to slow progress.
Policymakers must take a proactive role in stabilizing market rules to maintain investor confidence, drive down costs, and build a resilient energy future.
The solution is clear: competition works—let’s not disrupt what’s working.
Upcoming
Snitchler and Commissioner Rosner will both share more insights on the energy demand question at EPSA’s Competitive Power Summit on April 2, 2025 in Washington, DC. Register now to hear from them and more than a dozen other speakers.
