Overview of the Electricity Marketplace Paul Gromer SEBANE/Peregrine Energy Group Renewable Energy Leadership Summit June 7, 2005
Customer Choice All customers can choose a competitive supplier as of March 1, nd state in nation Breaks industry into 2 pieces, only 1 is competitive Supply -- competitive Delivery -- monopoly Old model Dairy with milkman New model L.L. Bean + Federal Express
Customers don’t have to choose Customers do not have to choose a competitive supplier For customers that do not choose, the utility provides generation service Switching to date -- after 7 years 103,000 customers 4%
Customer switching
Load switching
Switching by customer class
Utility Generation Service I Originally, 2 forms of utility generation service Standard Offer For existing customers as of March 1, 1998 “Stable” prices Default Service For new customers Market-based prices
Utility Generation Service II Standard Offer expired Feb. 28, 2005 Basic Service New name for Default Service Procurement and pricing Utilities procure power from wholesalers Prices to customers = prices charged by wholesalers For medium and large businesses, procurements and price changes every 3 months Trend: Greater price volatility
WMECo Default Service Prices
Why switch? Lower prices More stable prices Green power Customized product Basic Service = 1 size fits all
Opportunities for renewables Massachusetts Renewable Energy Trust Renewable Portfolio Standard Green delivered products Green certificate-based products
Mass. Renewable Energy Trust Surcharge on electric rates 0.05 ¢/kWh Produces c. $25 million/year On-site renewables PV, small wind, fuel cells, etc. Grid-scale renewables Large wind, biomass, etc.
Renewable Portfolio Standard Baseline requirement All suppliers must include a designated fraction of new renewables in their supply mix.
Green delivered products Competitive retail suppliers offer green products Customer switches from Basic Service to competitive supplier How does it work? Not a straw A bathtub
Certificate-based products Customer stays on Basic Service Purchases renewable energy certificates
Conclusions