Restructuring Today
October 21, 2005

Marketers see price spikes as threat to open markets

Marketers are facing a tough challenge on the public relations front as high fuel prices mask the benefits of competition.

            That's the consensus of several marketers at NEMA's fall industry roundtable.

            NEMA should boost its public awareness efforts and education campaigns on the benefits of markets, said Mark Hanks, manager of regulatory affairs for Select Energy.

            Otherwise, it could be a tough winter as customers and regulators become frustrated with higher prices despite open markets.

            Markets have brought customers savings, Hanks said, but high fuels prices might mask the benefits to customers.

            Marketers need to make sure customers know they're better off with competition and that it didn't cause the high prices.

            Open markets could go bust in five years if marketers don't step up and get in front of rising prices, cautioned Kyle Storie, CEO of Advantage Energy.

            FERC's task force (RT, 10/19) on competition gives marketers a unique chance to showcase the benefits of markets, NEMA President Craig Goodman said.

            NEMA set a conference call with members next week to collect comments on FERC's survey.

            NEMA's trying to help marketers get the most out of the new energy act.

            Goodman highlighted federal incentives for "advanced transmission technologies" (RT, 9/30) as an area marketers should explore.

            That's a broad term that includes anything boosting the capacity, efficiency or reliability of the existing or a new grid.

            The law does specifically cite energy storage devices, controllable load, DG and enhanced power device monitoring as grid enhancements.

            Selling or investing in advanced grid technologies could be rewarding, Goodman added.

            NEMA's working with members to explain the complex tax provisions and incentives in the act.

            It's important for marketers to take advantage of tax breaks in the new law because they can't recover investments through rate cases as big utilities can, he noted.

            Correctly using the alternative minimum tax credit can help utilities invest without draining private or public funds, Goodman said.

            Marketers need a more united voice when it comes to participating in RTOs, Storie added.

            Generators and grid owners usually are represented together at policy meetings and can leverage their power.

            Marketers too need a similar voice to raise awareness of RTO policies that can help and hurt them.

            Storie pointed to the netting bilaterals debate in the New York ISO (RT, 10/7)

            Most stakeholders agree it's a good policy, Storie noted, but it's not a high priority for generators and grid owners.

            Thus, it's been shuffled to the backburner for five years.

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