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Special Report

Fortnightly Magazine - February 1 1999

PECO and AT&T. It died this year, mercifully. It had nothing at all to commend it. What it was is they were going to hustle five services, everything from burglar alarms to natural gas ¼ those employees are now out with US West climbing mountains, probably. The point is, EnergyOne was a weak alliance. A tough alliance, where there's a tight number of people with an equity involvement and a clear, demonstrable market, that one will succeed."

He said when marketers emerge as dominant players, they will win more clout.

"The next alliance I can see, where I as a regulator would be worried, would be this one: What happens now when there is an alliance between a major marketer like Enron and the local distribution system?" Trebing said. "It's to both of their advantages. If Enron can give a high diversity factory, a high capacity factor to the local distribution system, what will happen? The local distribution system is in great shape, isn't it?"

Trebing said while the market participants hammer out strategies, there will be casualties.

"This big play among the giants is taking place," he said. "Big segments of the public are not going to be players. Consumerism is dead, I think. If it isn't, it's hard to take its pulse."

Meanwhile, as the giants do combat over commodity sales, other catalysts will be at play in their markets, speakers on a distributed generation panel pointed out.

Brent Gale, vice president and general counsel of MidAmerican Energy Co., said while most states have laws precluding sales by one utility in another utility's service area, most laws don't preclude customers from installing distributed generation on site. "It is a foot-in-the-door technique that is being used by many utilities," he said.

But Mark Siira, director of business development for Kohler Co., said it's not always an easy process.

"There is retaliatory pricing by utilities to discourage customer-installed equipment," Siira said. "I hear this from my distributors all the time ¼ they get a deal ready to go and at the last minute the rate base changes and all that effort they put in to save the customer money, it doesn't pay off."

Gary Mittleman, president and CEO of Plug Power, said his firm, developing 10-kilowatt fuel cells the size of dishwashers for residential applications, hopes to take advantage of the 75 million households that are near gas lines. Some 25 million of those will find fuel cells "viable" in the $3,000 cost range. That cost should decrease by 2010, Mittleman said. "By the time we hit those numbers, you and all of our neighbors will be going to Kmart and Wal-Mart and Home Depot and walking out with fuel cells underneath our arm and ¼ putting them in your house for 500 bucks."

He said his company plans to sell 1 million units by 2005.

"The fact is, there is demand all over the place and sometimes people say, well, your early systems, your first-year commercial systems are going to selling for seven, eight thousand dollars," he said. "Now that's too