Sorry, my question above isn't clear; let me try again:

In most states there isn't much competition at the retail level, and public utility commissions will allow LSEs to pass any "prudently incurred" costs, including energy purchases, to their customers. LSEs then would strongly prefer paying the renewable premium over paying the noncompliance penalty because (1) PUCs allow LSEs to recover the premium costs through the LSE's rates, and (2) the LSE's customers can't switch to a different provider in response to higher rates (unless they pick up and move out of state!).

So my questions are (1) does this sound right? and, if so, (2) does your analysis assume a competitive deregulated retail environment? If yes again, (3) does such competitive retail environment exist in the United States?