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Electricity deregulation is a fact in Alberta and there is no going back! Lessons learned in Alberta, Texas and other jurisdictions where competition has been introduced are applicable to all those who provide residential customers with electricity.

Today CABREE, the Centre for Applied Business Research in Energy and the Environment at the University of Alberta, announced the release of their latest working paper: "Retailing Residential Electricity: A Concept That Makes Sense?" The paper, written for the Centre by Cairine MacDonald, EPCOR Executive in Residence at the University of Alberta, provides an industry executive's perspective on the deregulation of electricity, with particular focus on the impact on residential customers.

"Cairine MacDonald's credentials, as an industry executive responsible for evolution of the wires/retail business from regulation to competition for the largest retail company in Alberta, give her a unique perspective," says Dr. Joseph Doucet, Director of CABREE and Associate Professor of Regulatory Economics at the University's School of Business. "Her insight as one who has had to work through the process of electricity deregulation in Alberta is invaluable. This paper provides food for thought for industry insiders, government professionals, politicians as well as academics."

According to MacDonald, the retailing of residential electricity, a concept embraced within the broader deregulation of the industry, is increasingly the subject of acrimonious and politically heated debate. In order to provide a context for dialogue, this paper provides an assessment of the current situation in the industry, in which it often appears that 'the emperor has no clothes'. There are no quick answers or easy solutions. However, there are insights to be obtained from the residential retail experiences in Alberta and in Texas, the competitive market leaders in Canada and the U.S., according to the Center for the Advancement of Energy Markets (CAEM).

While retail electricity has not received as much recent regulatory scrutiny as regional transmission, standard market design, market power mitigation and management of the spot market, it has continued to be front-page news in many jurisdictions. A question of importance to those working in the retail side of the electricity business is whether, in fact, the benefits of deregulation will be there for residential customers.

There is no going back for those who have embarked on deregulation, as even the most concerted reregulation efforts will be unable to completely "unscramble the omelette". At the same time, it is clear that some market approaches will facilitate customer choice going forward, whether in a competitive or "virtual choice" environment. However, the jury is still out on whether electricity, a product that consumers generally cannot see, smell, touch, taste or feel, will engage the interest of residential customers.

Over the long term, if the benefits of deregulation are to be realized there must be an incremental approach of moving forward on a number of fronts simultaneously. At the same time, the long term needs to be understood in terms of decades rather than months or years. It is this reality, which is in direct conflict with time frames for re-election, which will continue to make deregulation at the residential level problematic for politicians and regulators.

There are lessons to be learned from those who have gone before. As an industry, we may have learned these lessons the hard way, but we have also developed considerable expertise that will help smooth the way for those who follow. Now it is time to take the lessons of experience and apply them, gently and carefully and thoughtfully, taking the time to "get it right".

MacDonald concludes, "We do not have a choice as to whether to provide electricity to residential consumers. We do have choices to make about how to provide electricity in a way which benefits the customers, takes into account their preferences and adheres to the principle that 'if you can do no good, at least do no harm'. "

The discussion of industry issues includes reference to work done by the Center for the Advancement of Energy Markets (CAEM) and the Consumer Energy Council of America (CECA), as well as thought provoking quotations from industry experts such as Dr. William Hogan of Harvard's Kennedy School, Eric Cody of Plexus Research, Mike O'Sheasy of Christensen Associates and Jan Carr of Barker, Dunn and Rossi. The paper also captures the views of a number of politicians from California, Texas and New York as well as Alberta.

CABREE is a non-partisan, independent research centre, located at the University of Alberta's School of Business in Edmonton, Alberta, Canada. The Centre is dedicated to informing public policy debates on issues of vital importance to Alberta and Canada as a whole, with a focus on energy markets, electricity restructuring and climate change issues. Comments should be directed to Dr. Joseph Doucet, Director of CABREE, at joseph.doucet@ualberta.ca.