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Residential Pilot Programs: Who's Doing, Who's Dealing?

Fortnightly Magazine - January 1 1997

no side deal with CILCO that says, 'Well, no, we're going to work to support your legislative proposal' or anything like that," Cohen says.

He says when the CILCO complaint was filed people asked why they were going after CILCO: "And the reason is because we take a principal position that the market has to be fair, the playing field has to be level, and it's the responsibility of legislators, who still run this industry ... to make sure that everything is done fairly."

Cohen, perhaps giving some reason why the complaint was settled, and echoing Visnesky's comments, says that current statutes did not specify what the commission could do to enforce the law, which itself wasn't sufficient to deal with the issues.

"Pilots have to be designed as closely as possible to replicate the expected conditions in the real market to come (em not simply to be opportunities for marketing experiments by incumbents," he adds

O'Brien, whose company has won market share in Illinois, New Hampshire, and Massachusetts (em one of the few, if not the only, independent suppliers (em has become the "bad boy" of marketers, calling opponents on the carpet when he sees uncompetitive practices. "What it comes down to is we're going to serve notice on everybody and do whatever it takes to enforce the rules of competition. Because that's our only defense."

He says Wheeled Electric settled with CILCO because it didn't know who would win the case. The ICC staff, he says, was confused, and didn't understand its implications.

"So it was in our best interest to get on with this, to get along with CILCO," O'Brien continues. "And we've all agreed on how to do that, and we're very satisfied with the result."

"We keep hearing the same thing. 'It's just a pilot. How come you're complaining?' Well the fact is, the early marketplace is where all the rules are going to get set, so we say, 'Guard competition early, guard it now, use all existing laws, and whatever else you can use to make sure you end up with a competitive marketplace.'"

New Hampshire

O'Brien says New Hampshire's pilot, ordered by the state PUC, has appeared to be more equitable than the Illinois pilot. But the state whose motto is "Live Free or Die" has witnessed a huge electric price war since the pilot began, on July 1, 1996.

Almost immediately, about 30 suppliers vied for 17,000 customers from four utilities in the pilot program. Most of those customers (about 11,400) belonged to PSNH. The percentage share that each competitor earned during the pilot hasn't been made public.

Each of the four utilities added a "10-percent incentive credit," or took 10 percent off electric bills through a shareholder subsidy. For PSNH, that will mean a $6- to $8-million revenue loss over two years.

According to various sources, Enron was selling residential power at the rollout at 2.1¢/kWh. As a comparison, PSNH Energy was selling power at 3.3¢/kWh, and PSNH Energy's "sister" companies in the Northeast Utilities hierarchy (em Northeast Utilities Wholesale Power and Northfield