By Jesse Berst   The Distributed Energy Financial Group (DEFG) has released its annual assessment of retail electricity competition and the 2011 version is surprisingly upbeat. In "traditional" or "vertically integrated" markets, one company provides all parts of the service -- generation, transmission, distribution, and retail sales. With competition, the parts are separated into different companies. A local

 “wires company” delivers electricity and maintains the system. Retail providers sell electricity and provide customer service, competing with other providers for business.

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Although retail electricity competition still has many skeptics, more and more energy companies are jumping onto the bandwagon. "More than 12 million business and residential consumers are shopping for electricity across our country, reaping the benefits of innovative energy solutions, [and] lower prices," says David I. Fein, Director of Retail Energy Policy at Constellation Energy. "While more work needs to be done, the trend is toward continued expansion of competitive markets for all consumers."

"Retail electricity competition has matured over the past decade, transitioning to a more transparent market with many service providers and a variety of products," concurs Dr. Parviz Adib, Principal, Pionergy Consulting (former ERCOT market monitor).

In regions with successful retail markets, according to the report:

·         The average price of electricity is falling. In Texas, the lowest price went from more than 11 cents/kWh in 2008 to less than 6 cents/kWh in 2011.

·         The emphasis is moving away from competing on price (commodity sales) toward competing on choice (innovative bundles and special programs).

·         Customer choice is expanding. Residential customers in Texas, for instance, have 246 different offerings to choose from. Advanced meters and other smart grid advancements are enabling new offerings and new marketing channels.

·         C&I customers have access to bundles that include services such as performance contracting, energy management and on-site generation.

Are you a believer? Record your vote with the nearby Quick Poll.

Jesse Berst is the founder and chief analyst of Smart Grid News.com. He consults to smart grid companies seeking market entry advice and M&A advisory. A frequent keynoter at industry events in the US and abroad, he also serves on the Advisory Council of Pacific Northwest National Laboratory's Energy & Environment directorate.

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