Monday April 3 2006


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As prices fall, urge grows to
lock in those prices rises

. . . looking carefully at Texas market

Customers are a lot more receptive to locking in power contracts now than they were just three months ago, Legacy Group CEO John Elder told us.
What's the outlook for the Texas C&I power market?

Texas boasts one of the most successful C&I markets in the country.  But what's the future for the C&I market?

A panel of experts told Restructuring Today their views on the market's outlook on a September 90-minute audio conference, now available on CD.

Click here for details

"I appreciated having Commissioner Smitherman on the panel, which greatly increased [the events] credibility."
-- Peter Schaub, Pepco Holdings, Washington, DC        He runs a Houston energy management and consulting firm.
       Customers have seen how volatile and painful the market can be, Elder explained.
       They were open to greater hedging at the end of last year, he added.
       But locking in contracts based on record natural gas prices made it a too-bitter pill to swallow for some customers.

Customers now have a gift as gas prices have fallen about $8 since December.

       That's prompted a lot of buying, but with the new understanding that power has to be managed -- not simply bought.
       Elder's firm has always stressed marketers' credit risks with customers before picking a supplier.
       That hasn't always been popular with customers who are attracted by introductory, low offers.
       Warnings about counter-party risk typically fell on deaf ears, Elder observed.
       But several notable exits from the Texas market in the past few months -- and the expensive POLR drops that came with them -- have put credit risks at the front of customers' minds, Elder said.
       Elder is watching closely the Texas Energy Professionals Assn (TEPA) -- the new group designed to set standards for ABCs (RT, 3/16).
       Anything that educates customers is good, Elder said.
       They key is making sure that the message is effective and that the full story of competition is being told.
       Elder praised Houston Mayor Bill White's plan to promote shopping and educate customers about savings from competition (RT, 3/8).
       For Elder, everyone in the competitive power industry has the job to make sure customers understand how they can benefit from open markets.
       Otherwise, customers are going to feel victimized -- and open to rolling back competition.
       ABCs need to do a better job of getting their views out before the PUC and ERCOT, he added.
       ABCs are the closest stakeholders to customers, Elder reminded.
       Estimated meter reading is a particularly troubling challenge for ABCs, he explained.
       Bills based on estimated use should be clearly labeled, he insisted, because it's a "headache" for ABCs to figure out whether they are estimates or not.
       Imagine how hard it is, then, for the average customer, he added.
       Getting information from retailers can be tough for ABCs, Elder added, leaving ABCs guessing about the accuracy of bills.
       Originally published in Restructuring Today on March 20, 2006

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CONFERENCE LINKS

GCPA's FutureGen*erations - New Pieces to the Puzzle
 When: 04/05/06 - 04/06/06
Where: The Woodlands Waterway Marriott
www.gulfcoastpower.org/default/s06brochure.pdf

NEM 2006 National Energy Restructuring Conference
 When: 04/25/06 - 04/26/06
Where: Marriott at Metro Center
www.energymarketers.com/agenda/2006/April/April2006.htm

UTC TELECOM 2006
 When: May 21 – 24, 2006
Where: Tampa Convention Center, FL
 www.UTCTELECOM2006.utc.org

NET-ATHOME™ -- The world’s most international connected home event
When:  September 26 & 27, 2006
Where: Hilton Hotel -- Cannes, France
 www.net-athome.com/

Copyright 2006, ghi, llc.  All rights reserved.

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