Report: Electricity Market Reforms Could Save Consumers Billions Each Year

Midwest, Great Lakes, & Mid-Atlantic customers could save almost $7 billion annually

WASHINGTON, DC – A new report finds that electricity market reforms in the Midwest, Great Lakes, and Mid-Atlantic could save consumers over $6.9 billion every year. The report’s conclusions may have major implications for consumer advocates, large industrial companies, businesses, and homeowners in those regions.

“Consumers are looking for clean, affordable, and reliable energy that will keep their monthly electricity bills low,” said Kristin Munsch, Deputy Director of the Illinois Citizens Utility Board and President of the Board of the Consumer Advocates of the PJM States, which represents over 65 million consumers in 13 states and the District of Columbia. “There is great potential to achieve those goals with the cost-effective integration of wind, solar, and storage plants into our wholesale power markets.”

The consulting firms Grid Strategies and Milligan Grid Solutions co-authored the report, Quantifying the Consumer Benefits of the Market Reforms in the Report “Customer Focused and Clean,” for the Wind Solar Alliance. It concludes that the average residential customer in the PJM region, which includes the Mid-Atlantic and Great Lakes, could save up to $47 annually with significantly more wind, solar and storage on the grid. Consumers in the Midcontinent Independent System Operator (MISO) region, which includes 15 states and the Canadian province of Manitoba, could save up to $48 annually.

These projected savings quantify of some of the primary market reforms recommended in the well-received WSA report, Customer Focused and Clean: Power Markets for the Future, released last November.

“Enhancing the current market structures to encourage more flexible, efficient markets that also reflect the current public policy choices of state legislatures could save billions for consumers,” said Michael Milligan, President of Milligan Grid Solutions and report co-author. “The existing wholesale power market rules were largely developed for slower-to-react, ‘conventional’ generators, such as coal and nuclear plants. This report demonstrates the benefits of updating the rules to better accommodate the characteristics and potential contributions of newer sources of low-cost generation.”

Among the reforms considered, increasing power system flexibility through market structures is the most beneficial for consumers at higher penetrations of renewable resources.

“There are currently artificial barriers that are preventing the full participation of renewables, storage, and other new technologies in the PJM and MISO markets,” said Michael Goggin, Vice President of Grid Strategies, and report co-author. “Providing consumers with a real-time price signal that allows them to adjust their demand, rewarding flexible resources for their capabilities through improved market design, and allowing renewable and storage resources to participate in reliability services markets would yield the greatest consumer benefits.”

The report also found potential cost savings from improving coordination across the seams between ISO markets and through limiting the self-scheduling of generators.

“The suite of reforms proposed in this report show that the current market structures are not reflecting and incentivizing the full capabilities of the low-cost wind and solar resources available today,” said Kevin O’Rourke, Interim Executive Director of the Wind Solar Alliance. “We hope that regulators and market participants will use the findings from this report to advocate for more consumer-focused market structures going forward.”

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About the Wind Solar Alliance

The Wind Solar Alliance (WSA) is a nonprofit organization dedicated to accelerating the transition to renewable energy as a means of strengthening the U.S. economy and reducing the environmental impacts of our energy use. WSA uses research, communications, and advocacy to raise awareness of the benefits of renewable energy and the need for energy and infrastructure policies that recognize and reward those benefits. Visit www.windsolaralliance.org to learn more.

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