Why Monopoly Utilities Fear Competition in Energy
To navigate the electricity market today is to realize that you are no longer just a passive consumer, you are a decision-maker. At the Alliance for Competitive Power (ACP), we want you to own your energy destiny. Whether you are a utility professional or the person who pays the monthly bill, understanding your state's role in energy choice is essential to securing reliable and affordable power.
The Old Monopoly Way: Once a Safety Net, Now a Bottleneck
For decades, folks believed electricity worked best when handled by a tightly controlled handful of companies. Regulators fixed rates, guaranteeing utilities profits while, in theory, protecting families from price shocks. But what sounded smart a hundred years ago now acts as a barrier to progress.
According to the Sightline Institute, monopolies rake in more profit the more they invest in infrastructure-even when those investments aren’t the most efficient. This is because utilities do not earn profit on the electricity itself, but rather a guaranteed rate of return (often around 10%) on the physical assets they build. This model can create a "gold-plating" effect, where utilities are incentivized to build expensive new infrastructure rather than innovating or repairing existing systems.
Why Monopoly Utilities Push Back Against Competition
When a company’s earnings are guaranteed by law, the drive to get creative and trim expenses fades away. Monopoly utilities don't face the competitive pressure that forces other businesses to sharpen their pencils.
Research from the Retail Energy Advancement League and George Washington University highlights the cost of this stagnation:
Cost Disparity: Between 2008 and 2024, average power prices in monopoly states increased by 46.5%, compared to just 14.3% in competitive markets.
Unrealized Savings: Estimates suggest that customers in monopoly states could have saved over $776 billion over the last 16 years if their price trajectories had followed those of competitive states.
Industrial Impact: In monopoly states, non-residential (industrial and commercial) prices increased by nearly 40% since 2008, while they actually decreased by 0.3% in competitive regions.
Where Choice Exists, Consumers Win Big
In states that cut utility monopolies down to size, the payoff is plain. As reported by Utility Dive, places with energy choice see lower costs and higher service quality.
Our own FTI Study Results show competitive markets consistently outperforming monopoly regions:
Reliability: Customers in restructured (competitive) states experienced 5% fewer outages overall.
Resilience: Competitive markets like PJM consistently overperform during severe weather events, such as Winter Storm Elliott, by utilizing market incentives to maintain "firm" capacity.
Emissions: Electricity in competitive states is produced with 15% fewer emissions than in regulated states, as markets more efficiently retire older coal plants in favor of newer technologies.
Are Monopoly Myths Blocking a Better Way?
You may have heard that only a monopoly can keep the power reliable. However, the numbers tell a different story. In competitive regions, private investors, not ratepayers bear the risks of project cost overruns and bad investments.
Even as renewables accounted for 93% of new capacity through July 2025, many monopoly utilities continue to fight to restrict consumer access to these choices. It seems odd that you can choose your phone service and internet provider, but not your own power plan. For a deeper dive, check out our blog post on state monopolies.
Rewriting the Rulebook: How Smart Reform Puts People First
So how do we fix this? Experts at the Center for Growth and Opportunity (CGO) suggest a roadmap of "quarantining" the natural monopoly:
Regulate the Grid: Keep the physical lines and meters regulated to ensure universal access.
Open the Generation: Allow independent power producers to compete to provide the actual electricity.
Empower Retail: Let consumers choose the plan that fits their needs.
This structure cuts bloated profits and aligns the utility's incentives with your own. To see more, visit How Competitive Energy Markets Power Consumers.
FAQ: Utility Monopolies & Your Choices
Why did utilities get to be monopolies? Back in the day, the massive cost of power lines led regulators to believe only one company could manage the grid efficiently. This "natural monopoly" theory is now outdated as technology makes decentralized generation possible.
Is reliability really better with competition? Yes. Metrics like SAIFI (frequency of interruptions) are roughly 10.4% lower in competitive states, as providers must compete on quality to keep customers.
How can I get involved? Stay informed and advocate for open markets using the contact page on the ACP website.
Conclusion: Take Back Your Power
Monopoly utilities hang onto the past because it’s good for their bottom line, not yours. Open markets mean meaningful savings, cleaner energy, and real choice. Want more stories and updates? Check our Video Library and the News section. Help us put the power back in your hands where it belongs.
