Highlights: May 2020

• Wholesale electricity prices hit new 12-month lows in New England (ISONE), New York City (NYISO), the Mid-Atlantic (PJM), the Southwest (Palo Verde), Southern and Northern California (CAISO), and in the Northwest (Mid-C) during May 2020.
• New 12-month low daily peak demand levels were set in New England (ISONE), New York State (NYISO), the Mid-Atlantic (PJM), the Midwest (MISO), and in Southern Company.
• Net electricity generation in the United States decreased 7.6% in May 2020 compared with the previous year, mainly as a result of mitigation efforts for the novel coronavirus disease (COVID-19).

Key indicators

Residential retail choice recovers from dip in customers, growth trends continue in California and Massachusetts

Source: U.S. Energy Information Administration, Form EIA-861, Annual Electric Power Industry Report.

Note: Excludes Texas data from residential retail choice customer totals because Texas's retail choice program is mandatory under state law in areas operated by ERCOT.

Residential retail choice programs give customers the option to purchase the energy component of their electricity service from one entity (an energy-only provider, for example, a retail power marketer), while a second entity (for example, a utility) delivers the electricity to the customer. These programs differ from traditional utility services, in which a full-service provider is the default choice for customers, meaning their utility both purchases their electricity service and handles the delivery to their home. Total U.S. residential retail choice customers have steadily increased during the past few years from their recent 2016 low of 10.6 million to 11.1 million in 2018. Residential retail choice customers peaked in 2014, reaching a high of 11.4 million.

Since 2014, several states have seen marked declines in the number of residential retail choice customers, while others states more recently have seen their penetration rates significantly increase. Illinois and Connecticut have seen the greatest declines in their penetration rates, or the percentage of total residential customers that have chosen an energy-only provider. Illinois’s penetration rate has dropped from 57.3% in 2014 to 34.1% in 2018 following the polar vortex, when many customers experienced large increases in their monthly electric bills as a result of the spike in prices. Similarly, the share of residential retail choice customers in Connecticut dropped from 36.4% in 2014 to 25.8% in 2018. In 2015, state utility regulators in Connecticut passed a ban on variable rate service contracts, which could have slowed growth. In contrast, California and Massachusetts added 616,353 and 168,914 retail choice customers, respectively, from 2017 to 2018. As a percentage of the total retail choice market, California retail choice customers went from only 0.4% of the residential market in 2012 to 11.3% in 2018, while the share of retail choice customers in Massachusetts grew from 34.7% in 2017 to 40.7% in 2018, ranking second nationally and only surpassed by Ohio (47.7%).

Source: U.S. Energy Information Administration, Form EIA-861, Annual Electric Power Industry Report.

The significant growth in California’s residential retail choice market since 2012 is primarily a result of the formation of community choice aggregators (CCAs). CCA programs allow local governments to exercise greater buying power in purchasing electricity from retail power marketers on behalf of community residents and businesses while still having the power delivered by the local utility. Seven states (California, Illinois, Ohio, Massachusetts, New Jersey, New York, and Rhode Island) have authorized CCA programs, which also must be approved at the local government level and normally have opt-out provisions, which allow retail customers to not participate if they so choose. CCA formation has been significant in California in particular and, as such, large numbers of customers within these communities are moving to retail choice through CCAs. Between 2016 and 2018, the City and County of San Francisco, Los Angeles County, and Santa Clara County are just a few of the communities that launched their own CCAs.

Source: U.S. Energy Information Administration, Form EIA-861, Annual Electric Power Industry Report.

During the same time period, only Massachusetts achieved similar growth in the penetration rate of residential retail choice. The relatively high electricity prices in the state could be a contributing factor; residential electricity prices ranked as the third highest in the country in 2018. Residential retail choice customers expanded by 18% in 2018 (1,114,652) compared with 2017 (945,738). Municipal aggregation has also been popular in Massachusetts for cities that choose to shop for their own power. However, in January 2020 the Massachusetts attorney general reportedly asked the state Department of Public Utilities to evaluate the impacts of retail choice markets on low-income consumers. The attorney general has also reached settlements with a few key players in the industry to restrict certain marketing practices directed at consumers.

Source: U.S. Energy Information Administration, Form EIA-861, Annual Electric Power Industry Report.

• Principal Contributor:

• Name: Kimberly Palacios
• Email: Kimberly.Palacios@eia.gov