NRG Chief Executive: We Need More Retail Electricity Competition

As Nevada considers opening up more retail choice, NRG CEO Mauricio Gutierrez writes about the importance of competition.

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Throughout our country and in nearly every industry, competition has driven innovation, pushed human ingenuity and unveiled a new dimension of value by empowering consumers with choice.

We only have to look to the transportation industry to see its impacts. The on-demand transportation model essentially had no competition until Uber and Lyft disrupted it with a compelling consumer experience tailored to the modern traveler. Right now, in the electric power industry, there is a debate over the best technologies, business models and fuel types to power the economy of the 21st century. Competition is at the center of this debate. 

Even as we’ve made progress in other industries, competition has largely eluded the electric power sector. Power still operates much as it did 100 years ago. There are centralized plants that generate power, poles and wires to transport that power, and a company that sells power to consumers.

For most of the country, the pieces of this industry value chain are still regulated (the local utility) instead of allowing multiple providers to compete and win business. Today, 32 states participate in competitive wholesale markets and yet only 19 states and the District of Columbia participate in some form of retail competition. 

Increasingly, the fight for competition is being led by individuals and businesses who recognize the importance of electric power in the digital economy.

Voters in Nevada will have the opportunity to make their voices heard this November by mandating retail electric competition in the state. From resorts to retailers, it is no surprise that the likes of MGM Resorts, Las Vegas Sands Corporation, Patagonia and Walmart have voiced support for electric competition. These companies want the ability to choose and customize energy solutions that help them achieve their goals, from managing costs to advancing sustainability. They want more from their power.   

These benefits should not only be reserved for large corporations. Consumers are now expecting the same level of choice and customization they have come to expect with other products when it comes to their power.

Yet in many states, consumers must buy electricity from their utility, with no ability to shop for a more valuable product offering.

This means they are captive to the financial and environmental consequences of utilities fighting to keep uneconomic coal and nuclear plants online, despite the availability of more affordable, sustainable and efficient options such as natural gas or renewables.

It means that our power sector has not been structured to optimize consumer value in the same way that other industries have, which is troubling given the increasing role of electricity in powering the growing digital economy. 

Fully competitive markets can bring many benefits — just look at Texas. When competition first came to the electricity sector 30 years ago, Texas was (and still is) the only state to truly embrace it. This was only possible because legislators, regulators, utilities, competitive retailers and consumer groups joined forces to implement competition for the benefit of consumers.

Today, Texans can integrate smart home technologies, earn airline miles or even donate to their favorite charity just by paying their electric bill. Businesses can work with suppliers to procure renewable energy or set up 100 percent reliability on-site at their facilities.

This structure has ensured that the Texas electric grid keeps up with the energy demands of a strong and growing economy while creating an array of value options for consumers. 

In front of us, we once again have the opportunity to bring this value to all consumers and lay the foundation for “Power 2.0,” a new paradigm that focuses each market participant on its core strengths.

Regulated utilities can focus on building the best, most reliable transmission and delivery system (the “poles and wires”), and competitive providers can bring to life the new energy technologies that consumers are increasingly demanding. We know this model works because we have seen it work successfully in Texas.    

The steps we take today can bring the benefits of competition to all electricity consumers and ensure our power sector — the lifeblood of modern society — is ready to keep up with the demands of the 21st century economy.

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Mauricio Gutierrez is president and CEO of NRG.