“Our charge was to go out on the attack and learn about operations ina deregulated setting. We were funded as a pilot and we operated that way.We did very little advertising. Our goal was not to become a rapid expansion-typecompany,” said Jean Redfield, president of DTE Edison America.

“Now, we can leverage the knowledge we gained by participating in thesemarkets and prepare to succeed in our home market in Michigan,” Redfieldsaid. The company will continue its preparation to compete in the deregulatedelectricity market in Michigan, scheduled for full implementation in 2002.She added that entering deregulated mass markets in other states is alsoa possibility.

Before the 90-day period expires, DTE Edison America customers willreturn to their local utility or choose alternative energy providers, thecompany said. It has 6,000 mostly electric customers throughout all ofPennsylvania and 500 electric customers in New Jersey. The company hadbeen marketing since 1998. New Jersey and Pennsylvania were the only twostates in which it was active. None of the company’s 19 employees are expectedto be affected.

Redfield told NGI that the company did not meet its sign-up goals, helpingmake the decision to pull the plug. She did not disclose what those goalswere, however.

“We believe that we have learned enough to conclude that the competitiveresidential and small commercial mass market is not profitable in thisearly stage of development,” Redfield, said. “The timing for a fully deregulatedmarket with large numbers of residential and small business customers participatingand economics that work in the mass markets remains at least a couple ofyears away.”

The closure does not affect another DTE Energy affiliate, DTE EnergyMarketing, which markets electricity and energy services to industrial,commercial and institutional customers in the same states and throughoutthe Great Lakes and Mid-Atlantic regions. Redfield said this affiliatehas been very profitable.

“The deregulation rules in the states were not the problem. Our effortsin the industrial and large commercial markets have been very successful.The problems we found were more in the consumer behavior and consumer marketingcosts related to the mass markets. The costs to enter the residential andsmall commercial arenas and compete in them were not justified by the sign-uprates.”

Since statewide electric choice started earlier this year in New Jersey,more than 8,400 customers have chosen an alternate supplier. Pennsylvania’selectric industry opened in 1998 and 408,414 residential customers havechosen alternates.

The decision to withdraw from Pennsylvania and New Jersey is in linewith DTE Energy’s home market-based strategy. Last year, the company tookmajor steps to strengthen its position in the Midwest by announcing a mergerwith Michcon (see NGI, Oct.11). Upon completion,the new DTE will have 11,500 employees, serving 2.1 million electric customersand 1.2 million gas customers in Michigan.

John Norris

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