The Electric Power Generation Association and the Electric Power Supply Association this week applauded the findings of a new study showing multiple benefits from the creation of competitive electricity markets in Pennsylvania

The study, conducted by Bates White, LLC and entitled, “The Pennsylvania Electricity Restructuring Act: Economic Benefits and Regional Comparisons” said the 1996 passage of the Pennsylvania Electric Generation Customer Choice and Competition Act (Competition Act), has resulted in a number of benefits for Pennsylvania consumers and businesses ranging from lower costs to the construction of new generation and more efficient operation of already existing power plants.

“EPGA’s members now operate in the largest and one of the most competitive wholesale electricity markets in the world – PJM – where every plant must compete against one another for running time on the basis of cost. The Bates White report documents the tremendous efficiencies in operating performance that this market has produced and how those efficiencies have benefited consumers in Pennsylvania and throughout the mid-Atlantic region,” Douglas L. Biden, EPGA’s President said.

“The results of the Bates White review of Pennsylvania’s competitive power market clearly demonstrate the success of competition, even as it continues to evolve, and helps cast significant doubt on what competition’s detractors have been saying in support of rolling back restructuring and returning to cost-plus regulation,” said John E. Shelk, EPSA’s President and CEO.

The Bates White report highlights a number of consumer benefits resulting from electricity restructuring with the passage of the Competition Act in 1996:

· Today, Pennsylvania’s consumers are paying 12 percent less for electricity than they were paying in 1996 (inflation-adjusted). Between 1998 and 2005, electric rates in the Appalachian states rose 13 percent, while rates in Pennsylvania rose only 5.6 percent over the same period;

· Greater efficiency benefits have been a key result of restructuring. For example, nuclear power plants in Pennsylvania are generating 1.7 million MW/h more electricity today than they were a decade ago;

· Restructuring has encouraged the construction of significant new generation. Capacity has increased by roughly 23 percent between 1998 and 2005, while usage has increased 15 percent;

· The additional output of electricity provides between $50 million and $130 million in annual benefits to Pennsylvania, and over $450 million in annual savings to the PJM East region;”

· Competition shifts the risks associated with the construction of the next generation of power plants and infrastructure that is needed to power Pennsylvania as older plants retire away from consumers and to investors; and

· The authors also “argue that the competitive model holds the best promise for meeting future energy needs at lowest cost.”

A full copy of the report is available online.

3/2/2007