The Post and Courier: Competition in SC’s electricity market would benefit customers

June 20, 2023

Link to full article: Commentary: Competition in SC’s electricity market would benefit customers | Commentary |

South Carolina is in the spotlight following a recent report from Brattle Group on possible changes in the structure of the state’s electricity market. The report outlines estimates that “South Carolina’s electric customers could save anywhere from a few million dollars to a few hundred million dollars a year if the state were to overhaul the way electricity is managed, by introducing competition and efficiencies.”

The report also says “reforms could speed adoption of renewable energy, which would help the state’s fight against climate change.”

We are pleased to see the potential establishment of an independent system operator in South Carolina and the possibility of introducing wholesale competition into the state’s electricity market. This could pave the way for retail competition, giving consumers the opportunity to choose their power supplier, affording them greater energy choice and control over their energy usage.

In a recent op-ed in The Post and Courier, former Maryland Gov. Parris Glendening warned against restructuring South Carolina’s energy market, citing Maryland’s competitive restructured electricity market and saying, “Deregulation has led to higher electric bills and less reliable power.”

Glendening referenced 1999 as the year that Maryland chose to restructure its power market. Therefore, we chose 1998 as the reference year in our analysis to compare the state’s power price performance before and after restructuring in Maryland, and we then compared it to South Carolina, which did not restructure.

The data shows that Maryland has outperformed South Carolina on several important metrics, including price performance; carbon emissions reductions attributable to electric generation; grid reliability; and risk shifted from ratepayers to investors.

Between 1998 and 2021, Maryland has seen superior all-sector price performance, including residential, commercial, and industrial. Maryland’s all-sector prices have increased by 63.1% while South Carolina’s have increased by 83.8%. Not only have Maryland’s prices for residential customers performed better than in South Carolina, but the absolute price for residential customers in South Carolina has also now surpassed that in Maryland.

Moreover, Maryland has made impressive strides in reducing its carbon emissions attributable to electricity generation, another key metric benefit of competitive markets. Specifically, U.S. Energy Information Administration data analyzed by the Retail Energy Supply Association shows that between 2008 and 2020, Maryland reduced its carbon emissions by 65.0% while South Carolina only achieved a 45.7% reduction on the same measure.

Glendening also claimed that competitive markets decrease reliability, using Maryland again as an example. However, U.S. News ranks Maryland at No. 11 in the nation in terms of power grid reliability, while South Carolina ranks No. 19. Seven of the fully competitive states were in the top 15 on the U.S. News ranking, hardly consistent with claims that competition results in decreased grid reliability.

If South Carolina does proceed with electricity market restructuring, we expect the state to improve its performance reducing carbon emissions while also delivering cost savings to consumers. Any restructuring efforts should bring forward the benefits of competitive markets, including innovation, competition and economic development, allowing customers to select products that meet their preferences rather than a one-size-fits-all approach.

We welcome the potential establishment of an independent system operator in South Carolina and the introduction of wholesale competition. We encourage South Carolina to follow the lead of states that have successfully restructured at the retail level and prioritize consumer protection, clean energy deployment and added-value products while delivering cost savings to consumers.

Christopher Ercoli of Charleston is the president and CEO of the Retail Energy Advancement League.

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