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

Fortnightly Magazine - January 1 1997

probably did as well, if not better, than any of the competitors."

New York

On January 1, the juice kicks on for the Power Pick residential program. About 1,500 residential consumers get to choose their power supplier in the pilot, which, like the Illinois pilot, also is proposed by an incumbent utility. Savings projected by the program sponsor, Orange & Rockland Utilities, Inc. (O&R), run 1 to 2 percent. But because of commodity competition, similar to New Hampshire's, savings could run higher.

Would such savings (em $1 to $2 on a $100 electric bill (em produce enough incentive for customers to leave their utility and pick a company they may have never heard of to supply their power?

"No," says Terry Dittrich, O&R's regulatory affairs manager.

"We're not offering incentives to people to switch," he says. "What we're trying to do is an experiment that allows for customer choice. In New York, anyway, there's a lot of people running around (em as a matter of fact it's even been stated in some of the commission writings on it (em that customer choice is in and of itself a goal. So we said, 'OK, we'll try it out.'"

The experiment is aimed at how to handle and work with a market that gives customers the ability to choose.

"It is not a program designed to produce savings for the customer," Dittrich says flat out.

There's no risk to the utility because the rates are designed for energy only. The financial exposure to the utility is nil; O&R will receive 100 percent of its stranded costs. The savings will have to be pure commodity savings.

So what will be learned from this pilot?

O'Brien weighs in again: "Early surveys showed that a large percentage of customers would switch for no savings, just because they would like to have a choice," he says of pilots in any state. "That really hasn't panned out to ring true. Where a customer isn't going to save any money at all, we haven't seen them switch."

Massachusetts

Like New York's program, Massachusetts Electric Co.'s Choice: New England, began January 1. Some 10,000 residents and small businesses in four towns are participating in the stipulated pilot.

Coordinating the program is Environmental Futures, Inc., which will report results to the state's Department of Public Utilities (DPU). According to the company's data, residential electric is being offered by six suppliers at prices ranging from a low of 1.93¢/kWh (Enova Energy) to a high of 3.4¢/kWh for an AllEnergy "green power" option. AllEnergy is a New England Electric System affiliate, as is Massachusetts Electric.

Brian Abbanat, DPU electric power division director, says the commission is taking a "hands off" approach with pilot programs. The DPU's perspective says that pilots offer opportunities for companies to learn about customers, to improve customer relations skills, and to learn about technical systems needed to do business in a competitive market. The DPU sees pilots as company programs, he says.

"We wanted to put more energy into the restructuring process. We really aren't following [pilots] all that closely."