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NEM's Craig Goodman Highlights Consumers' Growing Appetite For 21st Century Energy Services and Technology Choices, In Reflecting On Over 20 Years Of Retail Competition And Its Continued Expansion

January 27, 2020

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Copyright 2010-20
Reporting by Paul Ring •

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Craig Goodman, who is retiring as President and CEO of the National Energy Marketers Association (NEM), has seen a lot in his 40 years of bringing competitive markets to the energy industry, but the constant has been the growing appetite of customers for choice in their purchases, including energy -- an axiom which Goodman sees no signs of changing as more states newly review how energy is provided to their homes and businesses.

Goodman, who has served as an energy policy advisor in the administration of three U.S. Presidents, has dedicated his life to opening energy to competitive, market based pricing, "from the wellhead to the burner tip", and the industry is now at the "last mile" of that effort. Goodman will still be part of that effort, as he will serve as Chairman of NEM's Board of Directors and in an advisory role upon his retirement.

Goodman will be honored at a reception at The George Town Club on the evening of January 29 in Washington D.C., open to participants of NEM's Strategic Industry Leadership summit which will be held Jan. 29-30 in Arlington, VA. See an invitation with specific details and RSVP instructions here. NEM's Strategic Industry Leadership forum will focus on NEM’s updated strategy for 2020 and beyond, including a review of various new markets considering retail choice. (more details and registration here)

Starting with the removal of price caps and deregulation of the crude oil and natural gas industries, energy competition has always produced tangible benefits for customers, Goodman reflects. When he started in the late 1970s, "the difference between the producer and consumer was somewhere between 20 cents at the wellhead, and between $10-15 at the burner tip. Much of that in between basically represented monopoly profits," Goodman noted.

"The more you minimize monopoly profits, the better it's going to be for the consumer," Goodman said, not just from lower prices to customers, but in bringing efficiency to the economy as a whole. “Since energy is the lifeblood of every economy, increased efficiency, minimizing monopoly profits and maximizing consumer savings is a major incentive for economic growth and increased consumer welfare,” Goodman added.

That's true regardless of the commodity -- oil, gas, or electricity.

Goodman noted that in just the period from 2008 to 2017, $340 billion in savings was realized in states with restructured electricity markets versus those states that to-date have retained the utility monopoly model.

Goodman started NEM in late 1997, and in short order helped open the Georgia natural gas market (AGL). Goodman noted that NEM has been at the forefront in every state that has since adopted choice, but it hasn't always been easy. The industry has been tested throughout -- from the 2000-01 western crisis, the timing of numerous states' electric rate caps expiring just as the natural gas market was shocked from hurricanes, to more recent challenges such as the polar vortex.

"But the setbacks are minor in historic terms," Goodman said, providing a lesson to be remembered as monopolies fight the newest efforts for retail energy choice. Even with a second ballot initiative for electric choice failing in Nevada -- due to a constant stream of negative ads funded by utilities -- the forward-thinking of choice proponents in Nevada (a diverse group ranging from businesses to educators to clean energy groups) along with the attention drawn by their efforts has engendered policymakers in nearly a dozen states to start asking the same questions about their own 100-year old utility model, Goodman observed.

"We have come an enormous way," Goodman added, noting that approximately 20-30 million Americans now have either electric or gas choice. That represents about 14 states and D.C. for electricity (with additional states with limited choice programs), and about 23 states with limited transportation and or natural gas choice programs.

More lasting is the continued appetite of consumers for choice, Goodman observed.

"Customers have choice in every other facet of their lives and are now demanding the same when it comes to energy," Goodman said.

"It's coming from customers wanting solar and green energy; customers wanting smart devices that can run their home and lower their energy bills; customers wanting an app that gives them everything at their fingertips," Goodman added.

"You can't stop the law of supply and demand," Goodman said. "Entrenched monopolies may be able to delay it, but they can't extinguish customers' desires," Goodman observed.

"In a world with smart homes and digital assistants, customers expect to be in control of their energy decisions, and that simply can't happen in a monopoly system," Goodman notes.

It's the reason, Goodman adds, that we're seeing new calls for energy choice in more and more states that may have been unthinkable just a few years ago -- Nevada, Arizona, Florida, Virginia, Colorado, Louisiana, the Carolinas, New Mexico.

"The further out west you go, the more they are attuned to a competitive business model, it's part of their DNA," Goodman added.

States are looking at energy choice with a, "fresh eye", which provides an opportunity for NEM and its members to confer with policymakers and highlight the success of energy choice where it's already been implemented -- in terms of customer savings, innovative products, and the adoption of renewables.

"There's a growing recognition that customers will drive the energy revolution, but that can only happen if regulators give them the freedom to do so," Goodman said.

And that's a contrast from the focus of the original wave of electric restructuring. Although the efforts have had the same goal, at the start of electricity restructuring, the issue was framed as one of economics and efficiency -- a solution to poor generation investment decisions made by utilities and the "gold plating" which plagues rate of return regulation, Goodman noted.

"Now choice is being driven by consumer demand for 21st century energy services and technologies," Goodman said. Customers want their energy provider to be like Apple or Amazon. They want to be able to have rooftop solar, to sell their excess power, to buy power from their neighbor, to purchase electricity when it's cheapest and to store it, to have their thermostat automatically adjust usage and earn rewards for saving energy, and they all want a choice when they do it.

Technology and the digital revolution have, "expanded the appetite for competitive energy choice," Goodman says, and the 19th century vertically integrated monopoly model simply wasn't built to accommodate it.

"What makes the current movement to expand the availability of retail choice so exciting is that it is a consumer-driven response to the Energy Technology Revolution. Consumers of all sizes are demanding access to an ever-expanding array of energy product and service choices to suit individual needs and preferences, not just plain vanilla utility service," Goodman concluded.

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