Call it “Deregulation” or “Retail Choice” or “Market-Driven” — They all mean higher prices and unreliable energy for consumers.

Supporters of “Retail Choice” claim consumers save money and that increased market competition drives reliability and innovation. The facts say otherwise.

Claim: Deregulation saves consumers money

REALITY:  Deregulated states continue to have, on average, the highest electricity costs in the U.S. Due to cost shifts and cherry-picking, small consumers are harmed the most, as they are viewed as the least profitable consumers to serve by merchant energy companies. Deregulation may provide the largest customers a short-term price break, but it comes at the expense of small customers, who are left to pay for the reliability of a network that the largest, most sophisticated buyers seek to leave.

Claim: Consumers benefit from market competition and “retail choice”

REALITY: Energy markets are complex. Comparing energy prices can be complicated and time-consuming.  Markets are complex for consumers to navigate, making it difficult for them to make informed choices about their energy providers and plans. Consumers face:

•  Inadequate Consumer Protection. Deregulation weakens regulatory oversight, leaving consumers with inadequate protections against unfair marketing practices. Customers may face challenges related to billing disputes, contractual issues, or service quality. In some cases, deregulation eliminates previously established consumer protections.

• Consumer marketing scams.  Deregulated energy marketers are incentivized to dupe customers into signing teaser rate contracts that quickly balloon to rates far in excess of what a regulated company would provide.  This practice is especially targeted towards low-income and vulnerable populations.

• Inequality of Loss of Access. Low-income households may have difficulty accessing affordable energy or be disproportionately affected by rising prices.  

• Market power, not healthy competition.  States that have adopted deregulation see consolidation into unregulated duopolies/oligopolies that lack both effective competition and effective regulation, the worst of all worlds for consumers.

• Market Manipulation. Markets are susceptible to manipulation and price gouging by unscrupulous companies, which can harm consumers and the economy.

Claim: Deregulation leads to price stability

REALITY: Consumers face high price volatility. In contrast with regulated markets, which seek to develop a portfolio of resources that stabilize prices over the long-term, deregulated markets are volatile by nature and tend to be driven by wild swings in natural gas prices.

Market volatility can lead to economic instability, as businesses and consumers may struggle to manage fluctuating energy costs and poor reliability.

REALITY: Unregulated markets create an unreliable energy supply. Companies focus short-term profits rather than long-term energy supply stability, causing supply shortages during high-demand periods.  Deregulated markets do not provide the proper incentives to ensure adequate availability of reliability-supporting electric generation.

REALITY: Private energy companies prioritize short-term profits over needed infrastructure and reliability investments, potentially resulting in neglected maintenance and unreliable energy grids. 

Deregulation does nothing to support a planned transition to a cleaner grid.  It is an environmental and reliability race to the bottom driven by companies seeking short-term profits over the long-term welfare for everyone in a service territory.

REALITY: Markets may not be adequately incentivizing the transition to cleaner energy sources, which can hinder efforts to combat climate change and reduce pollution.

The fastest way to deploy renewables is through state regulation of the traditional vertically integrated electric system. Investor-owned electric companies are leaders in clean energy development across the nation and have reduced carbon emissions 45 percent below 2005 levels, compared to the industry as a whole (including state and city-owned utilities) that have decreased emissions by only 33 percent.