Customers across the United States are increasingly seeking the ability to choose their electricity provider or natural gas supplier in order to lower their costs, achieve budget certainty, and choose cleaner energy.
Some 20 states offer customers the ability to choose their electricity provider, though this varies from allowing all customers to choose, allowing only certain customers (large industrials) to choose, or allowing only customers at certain utilities to choose.
About 22 states offer true "choice" programs for natural gas, which allow all customers to choose among competing natural gas suppliers. Nearly all states offer this choice to large customers through what are known as "transportation" programs.
Competition driven by customer choice has driven electric and natural gas rates lower in states that offer customers the right to choose their energy supplier. This puts more money in customers' pockets, and allows businesses to save on their energy bills and budget their energy spend.
But with only half of the states offering customer choice, many customers are missing out on these savings. Increasingly, customers in states without energy choice are recognizing the lower rates enjoyed by their neighbors with choice, and are asking lawmakers to reform their own state's energy industry to allow customers to shop for energy the way customers can shop for cell phones, long distance, and cable service.
One of the latest examples is Indiana, where at the behest of business customers, the state is examining the issue of electric choice. Indiana, which has seen cost overruns in the billions of dollars for power plants built by the state's monopoly utilities, is sandwiched between two states seeing drastic declines in electric rates thanks to electric choice -- Illinois and Ohio.
Sixteen companies employing 55,000 workers in Indiana, which represent more than $92 million in annual electricity purchases, recently urged Indiana state lawmakers to undertake a comprehensive study of the benefits of electricity competition for consumers in the Hoosier state.
In a letter to lawmakers, the Indiana businesses, which ranged from restaurants and retail stores to manufacturers and chemical makers, reported that, without choice, they have seen their electricity rates shoot up nearly 62 percent over the last 10 years.
One Indiana business said that if it were paying in Indiana the electric rates charged in Illinois -- where competition has driven down electric rates -- the business would be saving millions of dollars each year. That's money that can be used to hire more workers and invest in local communities.
The push for energy choice isn't confined to Indiana either. Arizona customers are increasingly seeking choice to save money on their electric bills, after a pilot choice program was over-subscribed last December.
Although Arizona regulators, due to procedural reasons, recently closed a docket concerning electric choice, this is just the beginning of the fight.
Arizonans for Electric Choice & Competition, representing more than 20 of the state's largest businesses, has said that, "electric competition will help employers reduce costs and increase productivity, strengthening Arizona businesses and attracting new businesses to our state. In the energy industry, new companies will emerge and existing companies will grow to serve new customers and find new and more efficient ways to generate, deliver and conserve electricity."
"For Arizona businesses like ours, electricity can be one of the most significant operating expenses to deal with," said Bill Jerald, Energy Manager at CalPortland's Tucson office, an AECC member. "To the extent we can better manage our energy costs by having more options and services from which to choose, we'll be able to transfer those savings to expanding our operations, hiring more employees and ultimately offering our own products and services at lower costs to our customers."
Customers in Virginia and Wisconsin continue to ask for a choice in energy provider, while customers in states which cap the number of customers who may choose -- like California and Michigan -- are also pressing policymakers to fully unlock the benefits of competition and allow all customers to save money on their utility bills through customer choice.