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Retail Marketers Trying to Gain a Foothold in MA

Retail Marketers Trying to Gain a Foothold in MA

Marketers are making a last-ditch attempt at establishing a beachhead for fair and open competition in the retail energy market in Massachusetts. They lost a battle earlier this year when regulators voted to allow utilities to assign portions of upstream gas transportation and storage capacity to customers who were seeking alternative suppliers. Marketers now hope they can persuade regulators to establish a set of minimum standards for utility transportation service, not only for the retail customer, but also for the new utility customer, i.e., the retail marketer, as well.

If the utilities are held to a certain minimum level of service, perhaps once the mandatory capacity assignment period ends marketers may return to compete for service, said Statoil Energy's Martha Duggan, vice president of regulatory and government affairs.

"A lot of people have thrown up their hands and walked away," she noted. "The economics have gone away completely [because of mandatory capacity assignment]. We won't be competing in the state in the very near future. But we thought it was important to get the comments in and get the department thinking along the lines of marketer service. I am assuming their general proceeding [on unbundling] will go on for a while so we would like to have [standards] in place in case the economics ever change."

In comments filed in a performance-based rate proceeding (D.T.E. 99-84) at the Department of Telecommunication and Energy, energy marketers, including Statoil Energy, Enron Energy Services, New Energy Inc. and others, pleaded for regulators to establish some service standards for utility service to retail marketers.

"We are saying that if you are going to measure and reward the utilities based on their service to customers, then recognize that marketers are also customers of utilities," said Duggan. "Design rewards that are based on components that are important to us --- like how fast we get the data, how accurate it is, how seamless is the transaction, how many customers are actually choosing."

The retail marketers are calling these standards "marketer satisfaction measures." Marketers rely on the utilities for information as well as service, If either is poor, both the marketer and the end user suffer, retail marketers said in their comments.

"The department can encourage utilities to improve service to retail marketers by adopting one very simple measure: the rate of customer migration to competitive supply..... Indeed, if such a performance measure had been in place during the first 13 months of retail electric competition, the Commonwealth would likely had done far better than the 0.1% switching rate that it achieved."

Marketers suggest the department benchmark several functions: accuracy and timeliness of responses to requests for consumption history; timeliness of processing enrollments; timeliness and accuracy of billing and metering data; number and frequency of billing adjustments; number of complaints from marketers; timeliness and accuracy of flow orders, timeliness and accuracy of algorithms to determine deliveries; speed of response to inquiries. The results of the utility score can be used to reward or penalize the utility.

"I wouldn't say in general that [the utilities] have made it difficult for us so far," Duggan added. "I think that this is a new way of doing business for them, but they don't necessarily recognize marketers as customers. The way transportation has grown up on many of these systems has been sort of like the way of the poor stepchild of the company..... You got maybe a meter analyst who was in charge of transportation gas. That worked initially because there weren't that many customers involved [initially]. But as we complete the opening of the market and would like to see lots of customers choosing, we want to provide the utilities with an incentive to change the way that they think about delivering service to all their customers, including us."

Duggan said based on attendance at recent department collaboratives, the marketer pool has declined significantly since last year. "The market is in disarray at this point because of the impact of the Feb. 1 order [on mandatory capacity assignment]..... Assignment of capacity has really put a wet blanket on the whole effort up there."

Residential gas competition in Massachusetts was supposed to begin Nov. 1 but because of the complexity of the capacity assignment rules and the decline in marketer numbers, there was a delay. The enrollment period is on-going. Marketers hope if they can hammer out some basic standards of service, the stage might be set for competition to grow in the not-too-distant future.

Rocco Canonica

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