DTE Energy Co. announced earlier this week that it is closing upshop on its residential and small commercial marketing efforts, atleast for the time being. The Detroit, MI-based company’sderegulated energy marketing company, DTE Edison America, said itwill halt operations in New Jersey and Pennsylvania in May,effectively withdrawing DTE Energy from all deregulated massmarketing efforts.

“Our charge was to go out on the attack and learn aboutoperations in a deregulated setting. We were funded as a pilot andwe operated that way. We did very little advertising. Our goal wasnot to become a rapid expansion-type company,” said Jean Redfield,president of DTE Edison America.

“Now, we can leverage the knowledge we gained by participatingin these markets and prepare to succeed in our home market inMichigan,” Redfield said. The company will continue its preparationto compete in the deregulated electricity market in Michigan,scheduled for full implementation in 2002. She added that enteringderegulated mass markets in other states is also a possibility.

Before the 90-day period expires, DTE Edison America customerswill return to their local utility or choose alternative energyproviders, the company said. It has 6,000 mostly electric customersthroughout all of Pennsylvania and 500 electric customers in NewJersey. The company had been marketing since 1998. New Jersey andPennsylvania were the only two states in which it was active. Noneof the company’s 19 employees are expected to be affected.

Redfield told NGI that the company did not meet its sign-upgoals, helping make the decision to pull the plug. She did notdisclose what those goals were, however.

“We believe that we have learned enough to conclude that thecompetitive residential and small commercial mass market is notprofitable in this early stage of development,” Redfield, said.”The timing for a fully deregulated market with large numbers ofresidential and small business customers participating andeconomics that work in the mass markets remains at least a coupleof years away.”

The closure does not affect another DTE Energy affiliate, DTEEnergy Marketing, which markets electricity and energy services toindustrial, commercial and institutional customers in the samestates and throughout the Great Lakes and Mid-Atlantic regions.Redfield said this affiliate has been very profitable.

“The deregulation rules in the states were not the problem. Theproblems we found were more in the consumer behavior and consumermarketing costs. The costs to enter these mass markets and competein them were not justified by the sign-up rates.”

Since statewide electric choice started earlier this year in NewJersey, more than 8,400 customers have chosen an alternatesupplier. Pennsylvania’s electric industry opened in 1998 and408,414 residential customers have chosen alternates.

The decision to withdraw from Pennsylvania and New Jersey is inline with DTE Energy’s home market-based strategy. Last year, thecompany took major steps to strengthen its position in the Midwest byannouncing a merger with Michcon (see Daily GPI, Oct.6). Upon completion, the new DTE willhave approximately 11,500 employees, serving 2.1 million electriccustomers and 1.2 million natural gas customers in Michigan.

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