NewPower Eyes Shell's Abandoned Texas Power Customers

A Shell Oil Co. affiliate, Shell Energy Services LLC, is exiting the Ohio retail electricity market and the Texas Electric Choice program in part because of the slowdown in deregulation and the volatility in energy prices over the past year.

Shell Energy said it will seek another marketer for its 30,000 Ohio power customers, and will not participate in the open market phase of the Texas program that is scheduled to begin Jan. 1, 2002.

It's decision to exit the Texas program provided an opening for one of its retail competitors. NewPower Holdings Inc. subsidiary, The New Power Co. (TNPC), jumped at the opportunity to grab Shell's Texas customers.

Shell said Texans who selected Shell Energy as their new electricity provider in the pilot phase may choose another marketer. If they do not make an alternative choice, they will be returned to their incumbent utility without requiring any action on their part. Ohio and Texas customers should not experience any service interruption. Shell Energy said it plans to continue to focus its efforts on its existing natural gas markets in Georgia and Ohio.

Shell said the decision was made because the pace of electricity deregulation across the United States has "slowed substantially." As a result, it is unlikely that Shell Energy will be able to reach adequate size nationwide to be profitable in electricity in a reasonable length of time, the company added.

"Volatile energy prices and an uncertain economic environment over the past few months have caused legislators, regulators, generators and marketers to reconsider their deregulation situations and strategies," said Alan Raymond, CEO of Shell Energy. "We commend the Texas Legislature and the Public Utilities Commission of Texas, as well as the Public Utilities Commission of Ohio, for developing innovative electric choice programs in their states. We believe they will deliver on their promises of choice and economy for their citizens.

Seizing the chance, TNPC began a marketing blitz aimed at Shell's old customers. "We invite the 42,000 Shell customers to call our special hotline at 1-888-272-9891 and join NewPower to lower their cost of energy," H. Eugene Lockhart, NewPower's CEO, said in an open letter to the people of Texas that appeared last weekend in select daily newspapers. He said his company remains committed to the more than 54,000 Texans who have signed on with New Power, the largest retailer of electricity in Texas.

Shell Energy -- which has had its problems with the setup of the Texas electric program before -- said in late August that it might be a good idea for the Electric Reliability Council of Texas (ERCOT) to continue to hack away at the backlog for customer switch transactions before any additional ramp-ups take place. The company also noted that the most recent data show that error rates in customer switch transactions were increasing, not decreasing.

Shell also emphasized last month that much of the data that the company and other retail electricity providers are missing is not just a day or two late but has been delayed by weeks or months. The company added that some of its customers still could not be identified, much less billed on a timely and accurate basis, or have their power scheduled correctly.

The open market phase for electricity deregulation begins Jan. 1, 2002. TNPC said it is offering Shell customers a quick sign-up procedure for the company's two-year plans that could save them up to $200 or more over Shell's plans. In Dallas, TNPC said in its letter that households using a monthly average of 2,500 kWh could save up to $350 versus TXU.

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