Competitive power markets allow independent generators to compete to supply electricity at the lowest cost—while grid operators ensure reliability and federal regulators oversee just and reasonable outcomes.
Today, competitive power markets serve two-thirds of Americans and represent more than half of U.S. installed power generation capacity.
- Today, more than half of America’s installed power generation capacity (58% of all installed MW) exists in restructured, or competitive, electricity markets (Source: EIA, 2021 and ISO/RTO Council 2023).
- Competitive power markets serve about two-thirds of Americans (U.S. Census Bureau, 2022).
Electricity demand is rising fast—from AI, electrification, and economic growth. Forecasting exactly how much power we’ll need—and when—is increasingly uncertain. Competitive power markets protect consumers by:
- Maintaining flexibility as technology and demand evolve
- Avoiding costly overbuilding
- Shifting financial risk away from ratepayers
- Attracting private investment
Explore the benefits of competitive power markets:
When power suppliers compete—and investors bear the risk—consumers see four major benefits:
Reliable Power: Competitive markets coordinate power across large regions, allowing electricity to flow where it’s needed most. This regional sharing improves reliability during extreme weather, unexpected outages, and demand spikes. Go deeper.
Cost Discipline: Competition disciplines prices and helps avoid unnecessary overbuilding. Consumers are protected from paying for power plants that are late, over budget, or never used.
Innovation: Because profits depend on performance, competitive markets reward efficiency, new technologies, and smarter operations—driving innovation across the grid.
Cleaner Power: Competitive markets have accelerated the deployment of cleaner energy by allowing new resources to enter quickly and inefficient plants to retire without locking consumers into decades of costs.
Competition vs. Utility-Owned Generation
Compared to “regulated” vertically-integrated utilities, power generators in competitive markets put private dollars into their investments and either recover or lose those costs based on their performance in the market.
Utilities, however, are guaranteed to recover the costs of building and operating infrastructure by charging ratepayers, as approved and overseen by state regulators. Customers pay for overruns, delays, and canceled projects.
This different approach can lead to vastly disparate outcomes, where customers can be billed for power projects that are delayed, run over budget, or in some cases are never built – leaving communities paying for megawatts they never use.
Competition rewards performance and discipline, while protecting consumers from costly mistakes.
Get a quick explainer on how competitive power markets contribute to cleaner, more affordable and reliable electricity:
Dive deeper on how power markets work and why they matter:
Credit: Competitive Power Ventures
Learn how we can deliver reliable and cost-effective electricity, and unleash innovation through local, state, and federal policy decisions:
Where Competitive Power Markets Operate
Seven regional grid operators run competitive wholesale power markets across much of the United States—serving most Americans.
Why this matters:
Larger regional markets allow states to share resources, reduce costs, and avoid building power plants that may only be needed a few days per year.
Why Competitive Power Matters Today
Electricity demand is rising fast, from AI, electrification, and economic growth. Forecasting exactly how much power we’ll need—and when—is increasingly uncertain.
Competitive power markets protect consumers by:
- Avoiding costly overbuilding
- Shifting financial risk away from ratepayers
- Attracting private investment
- Maintaining flexibility as technology and demand evolve
