A Policy That Could Help Lower Missouri Electric Bills

While summer is actually my favorite time of the year, it’s also hard on my wallet. As air conditioning use ramps up around the country, so do electricity bills. But there is one policy that could help lower Missourians’ electricity bills all year round: retail competition.

Throughout the United States, retail competition has helped to lower the electricity rates for residential, commercial, and industrial consumers.

Between 2008 and 2022, the 14 states with retail competition saw an inflation-adjusted 18.3 percent decrease in average price for all sectors—whereas the 35 monopoly states saw an average price increase of 3.6% in the same time period (these numbers include Washington, D.C., but not Alaska and Hawaii).

Let’s assume you have an electric bill of $200. In a state with retail competition, that bill would have dropped to $178. In a state with total monopoly, your bill on average would have risen to $211—a $33 difference.

Of the 23 states that saw the highest price increases in the 2008–2022 period, only one of them had retail competition (New Hampshire, which was 12th). The 14 retail competition states clustered near the bottom, with seven in the bottom ten.

Here’s an example of Texas’s retail competition website. When searching for a provider, consumers can use a number of different filters, including estimated electricity use, share of renewables, fixed rate versus variable rate (a fixed-rate provides a stable rate for the duration of one’s contract, while a variable rate fluctuates with market conditions), and company rating.

During the period from 2008 to 2022, Missouri saw the sixth-largest percentage increase in electric prices on average. While Missouri still has relatively low electricity prices, things are moving in the wrong direction. Shouldn’t the Show-Me State consider opening up the energy sector to market forces?