This data explainer details two competitiveness indicators included in the Power Sector Competitiveness Dashboard (PSCD)—generation capacity concentration and customer concentration—and illustrates how these measures vary across states. These values are provided nationally, with a detailed view of the Southeast.
These measures indicate that most state electricity markets are moderately or highly concentrated, according to guidelines established by the US Department of Justice and used by the Federal Energy Regulatory Commission (FERC) for antitrust analysis.
High concentration is particularly notable on the retail-market-facing side (customer concentration), with 39 states classified as highly concentrated, compared to 16 states for the wholesale-market-facing side (generation capacity concentration). While strong market concentration is not necessarily surprising in the power sector, what is notable is the considerable variation in market control across states.
About Concentration Measures
Concentration measures provide a quantitative assessment of market structure, which can be interpreted as an indicator of the market’s level of competition. The most widely used concentration measure—both in antitrust regulatory applications and academic research—is the Herfindahl–Hirschman Index (HHI) (EPA 2010; FERC 2012; DOJ 2024), commonly applied towards generation-related values.
The HHI is calculated as the sum of squared market shares in the market of interest. For the purposes of the PSCD, we are interested in the market shares of electric utilities (i) in each state(s):
HHIs = Σi (Market Sharei,s)2 × 10,000
This creates an index between a minimum value of 0 (no concentration) and a maximum value of 10,000 (monopoly). An HHI value below 1,000 is not considered to be concentrated, whereas a value of 1,000–1,800 is considered moderately concentrated and a value greater than 1,800 is considered highly concentrated (DOJ 2024).
We calculate two separate, complementary concentration measures using the HHI:
- Generation capacity concentration reflects utilities’ market share in terms of nameplate generating capacity owned in each state.
- Customer concentration reflects utilities’ market share in terms of residential customer counts in each state.
Data on utilities’ nameplate generating capacity and residential customer counts in each state were sourced from the US Energy Information Administration’s (EIA’s) Form EIA-860 and Form EIA-861, respectively. For additional methodological details, see the PSCD Methodology.
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Market concentration based on utilities’ share of total nameplate generating capacity exhibits a high degree of variation across states and regions. HHI values range from 145 in Texas to 8,582 in Tennessee, with an average value of 1687 across all states. The Southeast and Upper Midwest regions stand out as having relatively high degrees of generation capacity concentration. |
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Market concentration based on utilities’ share of residential customers reveals a high level of concentration throughout the country. HHI values range from 467 in Texas to 8429 in the District of Columbia, with an average value of 3068 across states. |
Adding Context
Because generation-based concentration measures are the metrics most used in power market analysis (EPA 2010), conventional assessments may discount the extent and implications of concentration in retail-facing segments of the electricity sector.
Concentration measures may be underestimated as a result of the reporting level used in EIA surveys. In particular, utilities that are subsidiaries of a larger parent company typically file separately. For parent companies with multiple subsidiaries operating in the same state, HHI measures based on EIA data may therefore be biased downward.
These metrics also represent values for a single year (2024). The Nicholas Institute is exploring a report on trends in market concentration over time to be published in the future.
Literature / Additional Information
| Resource | Description |
|---|---|
| Herfindahl-Hirschman Index (2024) | Definition of HHI from the US Department of Justice in an anti-trust and merger context from federal regulatory agencies. |
| Market Power in Electricity Markets: Beyond Concentration Measures (1998) | University of California Energy Institute paper that describes how HHI is a standard measure used to quantify the degree of market power or competitiveness in a market. |
| Electric Generation Ownership, Market Concentration and Auction Size (2010) | 2010 national generation concentration (HHI) values for 32 states from the US Environmental Protection Agency. |
| Market Power in a Transforming Electric Industry (2001) | Florida Public Service Commission description of how HHI and other concentration measures are and have been used in the power sector. |
| Analysis of Horizontal Market Power under the Federal Power Act (2012) | FERC Order describing the role of HHI in assessing market concentration. |
Another Measure: Market Share of Largest Utilities
The Southeast has largely retained vertically integrated utility structures with limited retail competition (i.e., competitive supply), in contrast to many restructured US regions. We provide a measure different than the HHI values above—market share by retail sales for the largest five utilities in each state—for another sense of the market control utilities have in the region.
- Click on state names to go to detailed pages, including the largest utilities by state.
- Explore a map of electric retail service territories
Suggested Citation
Weintraut, B., E. Parajon, and T. M. Gowdy. 2026. “Power Sector Concentration Data Explainer.” Durham, NC: Nicholas Institute for Energy, Environment & Sustainability, Duke University. https://nicholasinstitute.duke.edu/power-sector-concentration
