Wednesday, April 29, 2009

Another Verdict: Consumers Did Not See Tangible Benefits from Electric Restructuring

In a recent newsletter, veteran utility industry analyst and consultant Leonard Hyman weighed in on the issue of who, if anyone, has benefited from electric utility restructuring:
Every year, at year-end, I recalculate the numbers and come to the same conclusion after comparing electricity prices in states that restructured and those that did not. I always come up with the same result: prices started out high relative to the average in states that restructured and, more than a decade later, they remain just as high (or higher) relative to the average.

The regulated states started out and remained lower than the average. Shouldn’t competition have forced down costs and then prices in the restructured markets relative to costs and prices in regulated markets? The numbers always indicated that restructuring had not narrowed the gap. That is, probably, consumers did not see tangible benefits from restructuring.
Leonard Hyman, Rudden’s Energy Strategies Report, April 27, 2009. Hyman performed another analysis this year which took into account fuel price changes, and reached a similar conclusion.

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