|
Consolidation
is coming to Texas,
David Roberts predicts
He's talking
about the Texas retail power market, speaking as the ERCOT vice
president at Suez Energy Resources North America.
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The
market's seen a number of high-profile defaults in the past two
months -- for him a sign M&A is on the way, Roberts told us.
Buyers
are putting a much bigger emphasis on the credit worthiness of marketers,
he's found.
With
a rash of POLR drops since November, customers are seeking supplier
names they consider stable -- even if that means passing up ultra-low,
fixed-price offers from start-up firms.
Buyers
are awakening to the reality that we're in a new price environment
where gas won't fall below $5/mmbtu in the forseeable future.
At
the start of last year, a lot of customers were switching to index
pricing, he explained.
They
thought gas price spikes wouldn't last and didn't want to be caught
on a long-term contract when prices started to fall.
Today
he's seeing more customers coming back to long-term deals. Customers
have stopped trying to guess where fuel prices are going, Roberts
observed.
They
don't want to be bothered with the time and expense of tracking
markets but they do want transparency.
That's
why Suez came up with its Price Watch program (RT,
11/28).
It
prices a customer's daily load and sets targets for when customers
should update their contracts.
Headroom
has gotten better in Texas, Roberts said, and was really only a
challenge late last year.
Jim
Nordloh, Suez's vice president for the Midwest, sees big growth
for Suez once Let's Pretend competition ends in nine months.
Do
incumbents still have a big advantage in having a name brand?
Nordloh
doesn't think so.
Commonwealth
Edison (Exelon) in Illinois is a utility "people love to hate,"
he observed, so he doesn't think marketers face a big challenge
in selling against the brand.
Besides,
Suez has a big name too.
Yes
they did build the canal.
Originally
published in Restructuring
Today on February 6, 2006
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