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Politicians should trust consumers to choose their own electricity provider

Politicians should trust consumers to choose their own electricity provider

By Grant Mandigora

Why should elected officials who won’t be office in 2040 dictate to Colorado ratepayers which energy source their electricity will come from?

Democrat gubernatorial candidates Mike Johnston and Jared Polis have pledged that Colorado will generate 100 percent of its power from renewables by 2040, known as the ”100 by 40” plan. Why can’t we as consumers choose an energy source of our preference and a provider for ourselves?

In 2002, when Texans  received the opportunity to choose a retail electricity provider,  55 percent of them exercised this option according to a study by Joule Assets. They could choose which energy source and what volume of electricity they wanted through the website PowerToChoose.

Before they gained the power to control their own energy destiny, Texas consumers lived in a regulated market where they had little to no choice over their electricity provider.

Contrast Texans freedom to choose with Coloradans.  Coloradans have tons of choices for craft beer. They choose their favorite way to commute to work. And because Colorado has so many transplants, residents cheer on any sports team they choose.  While natives might think its blasphemy to root for any team other than the Broncos, there is no Broncos’ monopoly. When it comes to electricity, Coloradans, unlike Texans, have no choice. None.

Oddly enough, Colorado has been billed as the “Silicon Valley of the Rockies,” implying it is a technologically forward-thinking  state – yet it is lagging behind when it comes to allowing electricity choice. Why? One word: regulation.

Colorado is one of twenty-one states across the country stuck in a regulated market dominated by monopoly utilities. Fourteen other states are partially regulated and only fifteen states are considered deregulated – where customers are free to choose their retail electricity provider.

Of course Coloradans deserve the right to choose their electricity provider, the real debate is over how this should be done.

There is reason for Coloradans to care about choice. A study by the Independence Institute shows that the price of residential electricity in Colorado has risen by 61 percent  over the last fifteen years, nearly two and a half times that of median household income and nearly double the rate of inflation. This hits consumers, especially low-income ratepayers, the hardest.

In 2014, the Spark of Freedom Foundation cited Colorado’s 30 percent renewable mandate as one of the primary reasons for the price increases. One alarming statistic from their research shows:

The average Colorado household has already paid an extra $2,100 in electricity costs (more than $350 per household per year) beyond what each household would have paid if the state’s electricity prices rose merely at the same pace as the national average since 2007.

Despite this evidence, candidates Polis and Johnston want to increase the cost of electricity by supporting the “100 by 40” mandate. Long-suffering consumers are trapped and have no choice but to accept that their power will cost them more.

Case in point—in 2014, the Washington Post profiled Colorado single working mom Sharon Garcia, who was forced into what the Post termed a “Depression-era obsessiveness” over her family’s electricity use because her rates increased so much and so quickly.  She and her family wouldn’t use their oven in summer and unplugged appliances after each use to save money, which was sometimes the difference between the family eating or not.

Without retail choice, bad public policy and monopoly utilities hold ratepayers like Sharon Garcia hostage. According to American Power and Gas, choice in electricity providers allows consumers to feel good economically and environmentally because choice leads to lower prices, better customer service, and the option to choose a power plan by resource such as an “all renewables” option. Not a dictated “all renewables.”

It’s hard to imagine that in the 21st century we are still fighting for the ability to choose our energy future. This, of course, is not to say deregulation is the panacea to all ratepayer ills, but it will allow for competition and consumer choice in a way that a regulated market never will.

Deregulation of the electricity market will be a policy challenge, but it beggars belief that customers cannot be trusted to control their own energy destiny.

Given all the information, Colorado consumers are savvy enough to make their own choices. If Texas, Illinois, and New York can do it, Coloradans can too. So, next time residents run into candidates Polis and Johnston and are told “100 by 40,” ask them, why can’t we choose our own energy future? #WhyCantWeChoose  #WhyCantIChoose

Grant Mandigora is an energy policy intern at the Independence Institute and a masters student in energy studies at the Jackson Institute for Global Affairs at Yale University.