Cambridge Energy Research Associates (CERA) issued a report lastweek outlining the possible avenues retail marketing will take asit matures. The report, ‘Customer Choice in the Information Age:North American Retail Energy Scenarios to 2015’, forecasts thedifferent situations that would develop based on how fast regulatedutilities exit retail markets.

“The question becomes whether the majority of customers areserved under a regulatory framework that only supports theprinciples of competition or one that fosters practicalcompetition,” Claire Behrens, CERA director of retail energy, said.Many of the new unregulated retail markets are not as open tocompetition as they could be as a result of compromises necessaryto satisfy the interested parties, CERA said. While about 3 million(5%) of the 60 million retail gas customers in the U.S. haveexercised retail choice, only about 1 million (1%) of the country’s116 million retail electricity consumers are being served bycompetitive suppliers.

In the report, which was co-sponsored by Arthur Andersen andEDS, CERA presents three scenarios titled Checkerboard, ServicePlus, and Silicon Nation. They lay out very different timelines foranticipating the size and speed at which the retail energy marketdevelops and which companies gain advantage.

The checkerboard scenario is the least attractive to marketers.Under this script, regulatory rules are ineffective and inhibitcompetition. Utilities remain the dominant supplier and mass marketcustomer choice is not widespread until the end of the studyperiod.

The other two scenarios, Service Plus and Silicon Nation, painta rosier picture for marketers. E commerce paves the way for moremarket options, utilities exit the retail markets more speedily,and customers get access to choice by the middle of the studyperiod.

Two indicators of a move away from the Checkerboard world wouldbe enactment of national legislation encouraging competitive retailmarkets, and industry agreement on national standards for retailtransactions, CERA said. Signposts of likely continuation ofCheckerboard dynamics would be a continued state-by-state,utility-by-utility approach to opening retail markets, and a lackof consensus about benefits produced and risks posed by reducingregulation of energy markets.

Because the Silicon Nation scenario leads to a faster markettransition, this scenario provides the highest level of customerswitching. By 2005, approximately 22% of the gas market and 12% ofthe power market has switched from their traditional utility. By2010 these numbers grow to 47% and 34%, respectively.

Alternatively, in the Checkerboard scenario the least number ofcustomers switch, amounting to half of the gas activity andone-fifth of the power activity that is seen in Silicon Nation.

For inquiries about the Retail Energy Services at CERA or topurchase a copy of the Retail Energy Scenarios report pleasecontact Dr. Gil Rodgers, Director, at 617 441-2673 or send ane-mail to

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