Customers win when companies compete.
Because electricity is the backbone of our economy, cost matters. When multiple power generators and independent companies bid to provide reliable electricity at the lowest cost, customers ultimately enjoy better outcomes.
Competitive wholesale electricity markets were established in many parts of the U.S. more than 20 years ago to replace a less-responsive, vertically integrated monopoly utility model. Since that time, competitive power suppliers have delivered substantial economic benefits to consumers and businesses.
Why? Because market signals provide incentives for power generators to improve operational performance and invest in new, more efficient technologies. Competitive markets also keep wholesale prices responsive to changing fuel costs. As resources become cheaper, markets integrate those resources and prices reflect the cost difference.
In a regulated monopoly utility model, investment costs are passed onto customer bills with less transparency. In contrast, as competitive power suppliers, EPSA members bear the investment and operating costs of project development and operations. Customers are shielded from investment risks and are not saddled with cost overruns or stranded assets.
Wholesale Electricity Costs Explained
- Power market participants pay wholesale electricity prices when purchasing electricity from the wholesale market.
- Buyers either purchase electricity for their own use or to supply to retail customers such as smaller businesses, homes and other power users.
- Utilities then charge retail customers and end-users for power supply through their monthly bills. Rates are approved by the state through public utility commissions. While lower wholesale power prices help reduce the cost of electricity, there are many factors that contribute to total monthly utility bills. Learn more.
By the Numbers
$3.2-$4 billion: Annual savings enjoyed by consumers in the PJM Interconnection footprint, which serves 65 million customers in 13 states and the District of Columbia.
35%: The decrease in average price of New England’s wholesale electricity between 2004 and 2017, driven largely by declines in the cost of natural gas.
$30.67: The average real-time price for wholesale power in New England in 2019 per megawatt-hour—compared to more than $80 per MWh in 2008.
$3.2-3.9 billion: Regional savings delivered to Midwest electricity consumers in the Midcontinent Independent System Operator service area in 2019.