Good News: Massachusetts May Eliminate Retail Choice
One theme of the clean energy transition is that state legislatures do not shy away from engaging in and directing energy policy. Massachusetts is no different. Case in point, Governor Charlie Baker (R) signed a bipartisan measure in 2016 directing utility clean energy procurements consisting of hydropower, renewable resources, and offshore wind specifically. The state legislature is now considering another omnibus energy bill to continue to advance the clean energy transition. In addition to indicating continued conflict and dysfunction between the independent system operator model and state policy prerogatives, the latest legislative effort has an interesting twist: S. 2842 has a retail choice rollback.
The notion of a retail choice rollback or re-regulation is oft discussed, but this Massachusetts proposal represents the first tangible effort to do so in some time. An equally interesting factor is who supports the rollback: consumer advocates and the Attorney General’s office. No, it’s not the purportedly villainous incumbent electric providers, but the erstwhile consumer advocates. That stinks for retail choice advocates that want to create a comic book good guy/bad guy narrative in support of their preferred model for electricity delivery.
Retail choice advocates want customers, regulators, and policymakers alike to believe that they and they alone are champions of competition; that retail choice is the only form of competition; and that the only thing standing between unfettered retail choice and customer freedom are incumbent utility dinosaurs. Facts can be troubling in politics, however, and Massachusetts has been digging into them. In a 2021 update to its ongoing study of the benefits of retail choice, the Massachusetts Attorney General’s Office found that “Massachusetts consumers in the individual residential electric supply market paid $426 million more than they would have paid if they had received electric supply from their electric company during the five-year period from July 2015 to June 2020.”
“Ruh-roh,” as Scooby-Doo said so many times. $426 million is almost half a billion dollars. It is no wonder that consumer advocates and the Attorney General are voicing support for this retail choice rollback—it’s right in line with their statutory charge to protect citizens and electric customers, more specifically.
This bill is one to watch for two policy reasons. On the one hand, it could be the first domino as states revisit the deregulation choices they made years ago with a data set to evaluate whether customers benefit or not. In addition, this shows that Massachusetts policymakers view retail choice as unnecessary, or perhaps even working at cross-purposes with, efforts to continue an affordable clean energy transition. Retail choice advocates will shout “competition” from the rooftops, but the half a billion in overcharges tells the story. It is no more competitive than other models of regulation, and it is quite a bit more expensive.