NCPA - National Center for Policy Analysis

California Consumers Stay Put

January 18, 2000

In early 1998, 10 million households and companies in California gained the right to choose their electric power provider, and some 60 competitors have lined up to take on the former monopolists. But according to the most recent figures, while industrial customers have embraced the opportunity to change their service, few residential consumers have.

  • As few as 2 percent, or less than 200,000, of the roughly 8 million households in California have changed utilities.
  • Around half of this two percent have opted for companies that supply power generated from so-called renewable energy sources.
  • On the other hand, as many as 25 percent of companies and public facilities in California have already opted to change power suppliers.

Residential customers have been reluctant to change for several reasons, say observers. The sheer complexity of the market is often enough to frighten customers off. Private customers still find it more convenient to receive just one monthly bill from their regular utility, which charges to distribute the power through its system of wires. And the cost savings beyond a state-mandated 10 percent rate reduction have so far been minimal -- due to fees customers pay to reimburse monopoly utilities for uneconomic generating facilities they built under regulation, and the fees consumers pay for their distribution services.

Some of the new utilities, such as Utility.com, hope to attract more customers by offering service-enhancements that allow consumers to pay electric bills, analyze energy use and eventually control household appliances through their personal computers and the Internet.

Source: Gerd Meissner, "Power Surfing on the Net," New World (Siemens AG), December 1999.

 

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