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Maryland marketers move
in with good prices

Maryland politicians are still posturing over their public images as power bill defenders, but marketers are actually doing something about residential rate relief.
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[read more]         Three marketers now are offering deals that promise savings to Baltimore Gas & Electric residential customers.
        Commerce Energy is the latest with a fixed-price "Price Stopper" offer of 10.8¢/kwh and month-to-month deals priced at 10.1¢/kwh in July.
        Costa Mesa, Calif-based Commerce is the first national marketer to move in.
        It's promising to offer other "innovative products" in the near future.
        Regional marketers Washington Gas Energy Services and Pepco Energy Services (PES) were first in BG&E's residential market (RT, 4/19) offering 11.17¢/kwh for 10% green power on a 12-month contract.
        WGES guarantees savings of 10% off summer rates -- 10.4¢/kwh - and 3% off winter rates -- 9.894¢/kwh, not including 0.315¢/kwh in transmission charges.
        WGES customers get a bonus -- 5% wind power – along with their savings.
        The utility's generation-only SOS rate July 1 is to be 11.556¢/kwh through September and 10.2¢/kwh in October through May
        Utility customers have been paying a summer rate of 5.495¢/kwh and 3.697¢ in winter that saved them an estimated $1 billion over the rate-freeze years.
        BG&E's rate stabilization plan -- now stalled by a court stay -- was structured to show the real cost of generation as the price to compare for marketer offers.
        Now that they have some headroom marketers are getting downright creative.
        WGES teamed with the Clean Energy Partnership (CEP) -- a non-profit group in Silver Spring, Md, whose 50 or so business members support sustainable energy -- to offer 50% or 100% wind energy at prices lower than BG&E and Pepco's SOS rates (www.wges.com/cep_wind/index.php).
        Business customers can get 50% wind and save 7% off summer and 2% off winter rates.
        Even 100% wind is 2% below summer rates and 1% winter rates.
        Customers buying 100% wind get free membership in the green group.
        Sterling Planet is supplying the renewable energy credits for the offer.
        Originally published in Restructuring Today on May 26, 2006

Direct loves Delmarva ...
no, no, not Virginia

Direct Energy is finding C&I markets in three Mid-Atlantic states to be fertile ground.
        "We're having a ball," Greg Cordell, the company's regional business leader, told RT.
        Direct Energy (Centrica) entered New Jersey and Maryland last summer and has been pounding on doors in Delaware for just a few months.
        The result?
        It's done a couple of big deals in Delaware where prices went up.
        Even before its deal with the state government (RT, 5/19) it signed up 35 big C&I customers -- including a school district -- through an aggregator.
        That deal is even bigger than the state government deal, Cordell said.
        The state deal is very "satisfying" though, allowing Direct to deliver the benefits of competition to the government and taxpayers.
        Direct was able to save 900 government and school accounts big money -- halving what would have been a 56% rate hike, Cordell noted.
        The 12-month deal serves about 90 mw of load -- government accounts in Delmarva Power's footprint -- and includes about 320,000 mwh, he said.
        The state hired Honeywell to analyze power use and find a good supplier from a relatively short list.
        Delaware is big this year because rate caps just ended, allowing marketers the opportunity to compete.
        Customers can begin taking lower-cost competitive supply as soon as their meters are read.
        Maryland is exciting too for the giant retailer.
        Direct signed up another 400 customers in the second open shopping season it held for the Mid-Atlantic Aggregation Group Independent Consortium (MAAGIC) -- a coalition of nine trade groups with 6,000 members who chose Direct as their preferred provider (RT, 4/14).
        About 900 members got in on the first open season and another is to be held once Delmarva Power, Pepco and Baltimore Gas & Electric reset their C&I rates.
        Members get a multi-year fixed rate if they sign with Direct, Cordell explained.
        He's seeing a lot of interest in the Type II rate class -- C&Is too small to pay hourly rates but big enough that their SOS power is being bought now twice a year.
        Big rate jumps next month have spiked interest but the C&Is might see even higher prices six months from now, Cordell pointed out.
        He predicts huge numbers will shop.
        In New Jersey, Direct has been selling to large C&Is mainly -- the 1,250+ kw customers who pay hourly rates if they don't shop, Cordell told RT.
        Maryland and Delaware's SOS provide a better climate for selling power to larger numbers of customers, he explained, than New Jersey's basic generation service.
        But Cordell is beginning to sell in the District of Columbia and plans to enter western Pennsylvania (Duquesne Light) soon.
        Duquesne's been ordered to try again to find a fixed-rate supplier for large customers but Cordell isn't worried about the order impacting Direct's success there.
        Direct has gotten its feet wet in Pennsylvania recently by winning the auction to serve a pool of Pike County Power & Light customers hit hard by a post-rate cap rate rise (RT, 5/8).
        Competition isn't just about beating the utility's averaged rates, he explained.
        Marketers have the advantage of being able to sell a range of products tailored to individual customers' needs, load shapes, desire for price stability, ability to manage energy use and taste for risk.
        Information is the key, he said.
        The Mid-Atlantic markets Direct has entered share hospitable market designs with some degree of certainty that its investment and commitment won't be wasted, Cordell added.
        But he's enthusiastic too about PJM -- the biggest, oldest and most liquid wholesale market in the US.
        With Direct's good credit, it can source power for its customers any number of ways -- bilateral contracts, over-the-counter deals, PJM's various market, financial hedges (NYMEX) or even buying plants as it has done in Texas (RT, 2/2), Cordell explained.
        That's where the firm's size and mighty parent help, he added.
        Direct Energy has resources beyond the capabilities of many smaller competitors, he noted, to get customers least-cost supplies.

        Politicians got it wrong
        Cordell didn't tell us but we've learned that about half of Delmarva Power & Light's people have decided not to take the political option letting them ease in the higher prices over time.
        Originally published in Restructuring Today on May 22, 2006

What does TXU think of the long-term outlook for gas prices?

Well they're going to sell the "lion's share" of its gas-fired plants (RT, 5/2), said TXU CEO John Wilder.
        So much for their view of gas prices in the Lone Star state.
        No wonder he wants to build all those 11 coal plants.
        TXU is talking now with a variety of potential buyers.
        They just may keep a few gas plants as peakers or to use the sites for coal plants.
        Wilder has taken over TXU at a time of great change and is ready for the challenge.
        He finds it tough for former monopolies to be successful in competitive industries.
        Look at all the bankruptcies in the airline, telecom and trucking industries, he told investors at TXU's own shareholders meeting.
        TXU was in a hole when the Texas market opened but it's dug its way out, Wilder said. But it's not where it wants to be yet.
        He's been scratching his head to figure out how to sell power to customers who can choose, Wilder conceded.
        But he sees the firm now as one that has evolved into a leader in product innovation.
        He's learned that it pays to give choices. That's why TXU has three times the product offerings of the next-closest incumbent.
        Shareholders pressed Wilder about why TXU wants to build 11 conventional coal plants instead of cleaner alternatives (RT, 5/3, 4/21).
        His reply?
        Coal gasification just doesn't work now.
        Gasification doesn't work with TXU's coal and sequestration hasn't been shown to be viable as yet, he responded.
        It would be "dangerous" to rely on experimental technology to supply customers given the small reserve margins in ERCOT, he argued.
        Integrated gasification combined cycle (IGCC) plants are the future, Wilder said, and TXU hopes to be one of the first to adopt the technology on a large scale.
        But right now IGCC is just a "gleam" in someone's eye, he observed.
        Originally published in Restructuring Today on May 22, 2006

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CONFERENCE LINKS

Life in a Nodal Texas Audio Conference
When: 06/09/06 , 12:00 PM - 1:30 PM CDT
 Where: Your home, work or cell phone
www.restructuringtoday.com/conferences/nodal-tx.html

The Future of ABC Channels in Texas
When: 07/21/06 , 12:00 PM - 1:30 PM CDT
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www.restructuringtoday.com/conferences/texasabc.html

IQPC's 3rd Annual Broadband Over Powerline 2006
 When:  July 25-26, 2006
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When:  September 26 & 27, 2006
Where: Hilton Hotel -- Cannes, France
 www.net-athome.com/

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