New NCAT Study Finds Residential Consumers Can Be Worse Off Under Restructuring

A new study by the National Center for Appropriate Technology documents the adverse impacts of electric and natural gas restructuring on some residential consumers. The study looked at five states -- Georgia, Massachusetts, New York, Ohio and Texas -- and found that, with few exceptions, restructuring laws have not brought about the lower prices or increased choices that many policymakers anticipated.

The five states are still in transition to fully competitive markets, and the study notes that this transition period will last longer than expected. Particularly important during and after the transition period are the pricing and delivery of Default Service -- service for customers who do not have and/or have not switched to a competitive supplier, a category that represents almost all residential customers in most restructured states. Default Service is crucial for residential consumers, particularly low-income. The NCAT study explains how states have failed to confront the long-term implications of competitive energy markets' failure to develop policies for providing Default Service when the transition periods end.

The NCAT study also found that opt-out aggregation, a low-cost way for municipalities to pool the buying power of large numbers of customers, has brought about significant energy savings and access to green power in two states, Massachusetts and Ohio.

The study, entitled The Transition to Retail Competition in Energy Markets: How Have Residential Consumers Fared? is available at the Experts Corner on the National Energy Affordability and Accessibility Project website.

The study is part of NCAT's continuing effort, through its National Energy Affordability and Accessibility Project, to document how restructuring is affecting residential consumers.

The study was funded by the U.S. Department of Health and Human Services Administration for Children and Families.

A forthcoming study will examine how low-income consumers have been impacted by the transition to competition in the five states.

Page Last Updated: December 7, 2005