Why Do We Need Electricity Retailers? Twenty-five Years of Evidence: What Does Competition in Energy Services Need?

Carlos Batlle

November 2026

Twenty-five years ago, before any market had abolished its regulated default supply, Paul Joskow questioned how much value electricity retailers could add for residential and small commercial customers, and proposed a benchmark: a Basic Electricity Service passing wholesale prices through to whoever chooses nothing — scaffolding, as he saw it, for a transition. A quarter of a century of earnest trying, that transition has to be considered over, and its lessons can finally be read. Revisiting his question against the record, we take apart the bundle of activities traditionally attributed to the electricity retailer, characterize the cost of each function — its magnitude and its economies — and assess where competition’s benefits could reasonably outweigh its costs, and where they could come from. The answer draws a line just above the commodity. The value competition could add lies above that line, in the energy services: adapting consumption to prices, and selling the customer’s flexibility to the system. Yet that layer has not quite taken off, for reasons that have to be carefully assessed — several of which Joskow already anticipated. As he proposed, a Basic Electricity Service — well designed, unsubsidized, and built to stay; the default for whoever chooses nothing, binding on no one — would first spare households from paying for nothing, and then improve the playing field on which whoever can actually add value gets more chances to prove it: which is what competition in energy services needs.