Business View Magazine l January 2023

77 BUSINESS VIEW MAGAZINE VOLUME 9, ISSUE 12 THE ECONOMIC CASE FOR CHOICE The data is clear. The introduction of competition drives down electricity costs. Research by the Retail Energy Supply Association (RESA) found that states that rely on regulated monopoly service have seen prices rise over time at a far steeper rate than those states that restructured to adopt competitive retail choice. In other words, regardless of the experience of any individual customer at any point in time, the economic benefit to states that decided to implement choice is a significantly lower weighted average cost of electricity than would be the case had they continued to rely upon regulated monopolies. From 2008 through 2021, the weighted average price of electricity in states with retail choice has fallen by 2%, while the weighted average price in monopoly states has risen by 21%. This astounding divergence validates the fundamental expectation that competition promotes efficiency and drives down prices. Interestingly, lower costs have accrued not just to customers who switched to the least cost provider but also to those who remained on backup service from the utility company. This is because under choice utilities have also become more efficient by procuring their backup service from third-party wholesalers, thereby harnessing competitive forces. TECHNOLOGY AND INNOVATION Looking back at the introduction of choices in telephone service, the changes over time have been astounding. When telephone service choice was introduced in the 1980s, the main driver for consumers was the attainment of savings on long-distance calls measured in cents per minute. Critics of competition pointed to rate comparisons between new entrants like Sprint and MCI versus the rates still offered by Ma Bell. At the time, they failed to grasp how competition would drive innovation in products, technology and consumer behavior. Early innovations like call waiting, call-answering and caller ID seemed underwhelming. Over time, however, competition in telephony has produced remarkable change, with products and services like email, texting, GPS navigation, internet search, music, and video RESA - RETAI L ENERGY SUPPLY ASSOCIAT ION