Are Recent Forays into Electricity Market Restructuring a Threat to Energy Efficiency?

Recently several states have launched investigations into possible implementation or expansion of electricity market restructuring1or retail competition. Competitive pressures and further increases in distributed generation may increase the push for retail electric competition.Will these explorations into retail competition present a threat to high levels of investment inutility sector energy efficiency programs? While the stated goals of retail competition and energy efficiency appear to be aligned — both seek to lower customer energy bills — we examine whether or not this apparent alignment of objectives holds true in reality. We review the performance and delivery of energy efficiency in states with retail competition versus those without retail competition. We analyze energy efficiency performance in states with and without energy savings requirements or targets, and with different administration models (e.g.administration by electric distribution companies versus non-utility administrators). The impact sof different forms, degrees, or specific provisions of retail competition are also reviewed. We also review the evolution of energy efficiency policies over time in several states with retail competition. Based on our findings, we provide energy efficiency policy recommendations for states with or considering electric retail competition.

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