Study finds that deregulated power markets decrease cost of generating power by $3 billion a year

Deregulated utility markets decrease the cost of generating electricity by $3 billion per year, according to a study from the Energy Policy Institute of the University of Chicago.

A majority, more than 60 percent, of power in the U.S. comes from deregulated markets, including power in most of Texas, where customers purchase power through retail electricity companies that offer different prices for power. Texas’ deregulated market went into effect in 2002.

Power companies in deregulated markets are more likely to use lower-cost power generating units, and reduce the use of power generators that cost more to run, the University of Chicago study found. The study’s conclusions are based on simulated data pooled from daily electricity operating reports from nearly every electricity generating site in the country from 1999 to 2012.

The deregulated market has its critics, however, who say that customers can be overwhelmed by the choices for power and often don’t choose lower-cost power plans. The University of Chicago study says that deregulated markets are not perfect, but the benefits — saving billions a year — outweigh the system’s disadvantages.

 

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