Texas Overtakes Pennsylvania as Competition Leader in Annual Report Card on Electricity Choice

New York and Maine also receive passing grades; Alberta Continues to lead Canada; England scores best in world and Australia’s Victoria scores in top 10

RED Index continues as best quantitative and qualitative tool of its kind; Methodology revised and data expanded

WASHINGTON, May 6—Despite California’s well-publicized troubles and the impact of the Enron collapse, the U.S. and Canada continue to make progress on electricity restructuring, the 3rd Edition to the RETAIL ENERGY DEREGULATION INDEX 2001 (RED Index) revealed today.

The latest edition of the RED Index, issued by the Center for the Advancement of Energy Markets (CAEM), an independent, non-profit think tank, shows five states, provinces, and territories in North America—Texas, Pennsylvania, Maine, New York, and Alberta—with passing scores of 60 or higher out of 100. Texas leads the U.S. and overtakes Pennsylvania, the U.S. leader in all previous editions of the RED Index. Alberta continues to lead in Canada but a major phase-in in Ontario in May will likely propel Ontario into the top ranks. 

England and several Australian provinces are now included in the Third Edition. “While England had long been recognized as a leader in energy restructuring, the surprise is how much further ahead England is compared to the US and Canada,” said CAEM CEO Ken Malloy. England scores 83 of 100, while the highest score in North America is Texas at 69.

The RED Index report also showed that : 

• From 1997 to 2001, as Figure 1 shows, the RED Index National Score (average of the scores of the 50 states plus the District of Columbia) increased from 1, 6, 9, 15, and 17, respectively. 
  

• The median score (the midpoint) was 3 of 100 and the mode (the score achieved by the greatest number of states) was zero, indicating that the national average was skewed by the high scores of a limited number of states.

“The California crisis and Enron’s collapse raised significant questions about the future of retail electric competition. With all the talk about state retrenchment, we were amazed that the U.S. and Canada continued to make progress on electric competition. Everyone wants to know how states have reacted to these events. The RED Index answers that question. It’s the only tool that quantitatively compares states to one another on a standard set of key attributes of restructuring.” Malloy said.

All eyes are on Texas now, in part because Texas represents a new, large, coherent retail market. Texas has benefited from its integrated retail and wholesale regulation under one state legislature and one state public utility commission. Within the Electric Reliability Council of Texas (ERCOT), the PUC of Texas has an opportunity to develop compatible wholesale and retail rules. 

The 3rd Edition of the RED Index has grown to a reference tool of more than 200 pages that measures the progress states have made in moving from the monopoly model of public utility regulation to the competitive model. The RED Index is based on 22 attributes that CAEM has identified as the foundation for an effective transition to competition. A RED Index score of 0 or less represents the traditional set of utility policies or total monopoly, and a score of 100 represents complete and effective implementation of the policies that CAEM believes are the necessary foundation of the customer choice or competitive model. The index focuses on retail competition and currently covers only electric restructuring. A similar index on gas restructuring will be issued this summer.

A summary of the RED Index can be obtained by going to www.caem.org.

The Center for the Advancement of Energy Markets (CAEM pronounced KAY-EM) is a nonprofit organization founded in 1999 to promote market-oriented solutions to the challenges that confront the energy industry, other network industries and the nation. CAEM is not a trade association, a consulting firm, or a lobbying group. It is a think tank developing intellectual capital for the movement towards new public policies and regulations, new business models, and new technologies driven by competitive energy markets. 

For more information on CAEM, contact Jamie Wimberly, President, at jwimberly@caem.org or by calling 202-483-4443.