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Four States Show Major Restructuring Progress

Four States Show Major Restructuring Progress

While Pennsylvania and New York are tied for the lead in electric restructuring, Michigan, Ohio, West Virginia and Rhode Island made the greatest progress so far this year, according to an analysis by the Center for the Advancement of Energy Markets (CAEM), an independent consulting firm based in Burke, VA.

CAEM has developed an indexing method to measure the progress of states in their efforts to restructure the electric industry. Using 18 key criteria, CAEM comes up with a score with zero representing the traditional monopoly model and 100 representing complete implementation of the competitive model.

In a July update to CAEM's Retail Energy Deregulation Index (RED Index), Pennsylvania and New York held the national lead in customer choice with index scores of 65 and 64 out of 100, respectively. Michigan, Ohio, West Virginia and Rhode Island jumped 20 points since the original CAEM index in February. Texas leads the South with a score of 53 and a ranking of fifth in the nation. And the national average is an index of 21 up from 17 in February.

"There seems to be a stronger movement in states that rank higher in average [power prices], since all contiguous states scoring in the top 10 for price also were the top 20 in the RED Index," said CAEM President Ken Malloy, a former staff member at FERC, DOE and the Illinois Commerce Commission. "But one cannot draw the conclusion that this is a movement confined to high-priced states. Nevada, Montana and Texas all are below-average states on price but are ranked above average in the RED Index."

Malloy said he's confident customer choice will be implemented in all states eventually. "But there is so much detail involved in 51 jurisdictions moving at different speeds on different issues that we need a user-friendly scorecard to measure each state's progress. The RED Index is the only effort to synthesize the mass of detail into a single number.... We believe the Red Index will help states benchmark their efforts against other states."

Rocco Canonica

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