The power sector faces intersecting challenges: surging electricity demand, rising customer costs, and the imperative to decarbonize the grid. Competitiveness policies that broaden market participation and better align utility incentives with these goals offer a path forward.

Affordable, reliable electricity is essential for productive, healthy and thriving communities. Achieving this goal at least partly requires understanding the dynamic relationship between electricity prices and consumer demand is critical for utilities, regulators, and governments seeking to deliver affordable, reliable, and efficient energy. This paper presents updated estimates of a standard measure of price responsiveness in the US residential electricity market—price elasticity of demand for electricity (PEDE)—and explores how it varies across states. 

The purpose of this policy brief is to describe different ways to engender consumer choice, third-party participation, resource sharing, and regional grid management in the power sector, using existing examples from this region. It includes questions stakeholders might think through in these conversations, and fundamentally aims to educate and inform.

Given stated stakeholder clean energy and consumer goals, this paper offers a way to evaluate options for enhancing competition, compared to how utilities traditionally operate the electricity grid. The focus here is on wholesale transactions between generators and utilities serving end-use customers. These utilities then sell electricity at retail to their customers, and in many regions including the Southeast, they are state-regulated monopolies responsible for serving their customers at least cost.

This case study lays out the four Southern proposals submitted to FERC, and chronicles how this directive played out in the South. In a sidebar, the case study also describes the retail competition vision being explored in North Carolina during the same time period. While the Southern Grids did not launch, the GridSouth (in the Carolinas) and the GridFlorida proposals reflect a concerted effort by the participating utilities to explore market creation, as well sustained engagement – and some support – by regulators and stakeholders.

Cost-of-service states with vertically integrated utilities can manage a rapidly changing electricity sector by expanding opportunities for competition, even while maintaining the traditional vertically integrated utility. In fact, competition has been deployed successfully by cost of service states to meet customer needs, bring down costs, and encourage innovation.