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Direct Energy Sees 'Suite' New York Market

Direct Energy Services LLC said it will offer combined natural gas and electricity service in New York later this year. The company is currently supplying power to customers in New York, including New York City. Direct Energy is initially supplying power throughout the Orange and Rockland, National Grid (formerly Niagara Mohawk) and Consolidated Edison territories. It plans to expand throughout the state during 2006.

"We strongly believe that energy choice benefits New York consumers as reported by the New York State Public Service Commission (NYPSC) [two weeks ago]," said Badar Khan, Direct Energy senior vice president. "Electric prices have dropped an average of 16% for New York residents between 1996 and 2004, according to the NYPSC. New York residents are also benefiting from the innovation and emphasis on customer service that competition creates.

"We will be offering a variety of fixed, market index and hybrid products that provide varying degrees of price stability and flexibility, based on the individual consumer's needs, to residents and businesses throughout New York."

Direct Energy said that New York is expected to evolve into one of the most active and attractive states in the country for energy retailers over the next five years, according to consulting firm KEMA. This is likely to bring unprecedented options to New York residents and businesses, provided the NYPSC continues implementing policies that develop competitive retail energy markets based on the benefits that the commission has documented in its report.

Direct Energy has been in the U.S. market for a number of years and now has about five million customers in the States, Khan said. The company's rationale for entering New York is the market's size and, particularly, state regulators' attitudes and actions toward competition. "They're strong advocates, as we are, of customer choice," he told NGI. This is evidenced by New York's embrace of market-based rates and the discouragement of utility fixed-price products.

Khan said Direct Energy has been considering entering New York for "quite some time. New York is a big market opportunity for us where we're for the first time in a long while offering electricity and gas to both business and residential customers, so it's a market that we're offering almost a full suite that we don't offer anywhere else in the United States." Elsewhere, he said the company sees opportunities in the Midwest with both residential and business gas consumers, Massachusetts for business consumers of gas and electricity.

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