Posted by: marilynshowalter | June 20, 2007

New Math for New England and New York

Former U.S. Senator Don Nickels, Chairman of the Compete Coalition, touts the annual reports of ISO New England and the New York ISO because “prices fell by 20 to 30 percent in most areas in New York, and in New England the average wholesale price of electricity fell 21 percent.” Nickles asserts that these and other studies offer “clear and compelling evidence that competitive markets produce consumer benefits, including in the area of price.”

Really? The ISO reports themselves concern wholesale prices, not retail prices to consumers. In the previous post, I’ve shown the retail price-trends for New York, compared to those in regulated states. Here are total delivered retail prices for all six New England states, compared to prices in the regulated states. (Although Vermont is regulated and ordinarily is shown with the regulated states, in this graph it is included with the other New England states.) As you can see, the gap has roughly tripled in recent years.

New England Price Trends - total

These trends are similar for all classes of customers.  In order for this widening gap to be a “benefit,” one must accept Nickles’ implicit argument that the price-gap would have been even greater had New England remained regulated, despite its relatively parallel path, when it actually was regulated (in the 90s), to prices in the other regulated states. This might be his position, but it is not a clear and compelling one.

For more comparative price-trend graphs, visit PPI’s website.


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