Power Markets Week

Large users continue to buy power from retail marketers in increasing numbers in the Northeast as high fuel prices drive up utility rates, spurring the search for competitive alternatives.

Customer shopping also has been driven by those large users that pay hourly market rates if they stay with their utilities in Maryland, New York and New Jersey.

Among residential customers, however, competition is limited as the number of customers buying from marketers in several states remains in the single digits.

In Maryland, competitive purchasing rose again in May, when large commercial and industrial users bought 2,391 MW, according to Public Service Commission figures. That represents more than 85% of the total load used by the large C&I class, and is higher than the 2,383 MW that large C&I users bought competitively in February.

In the Conectiv territory, big customers buy 96% of their load (129 MW) from marketers, and in Baltimore Gas & Electric's much larger territory, the total runs almost 90%, or 1,466 MW. Pepco's large C&I total is 84% (664 MW), while Allegheny, with low-cost, coal-fired generation, has the lowest total, at 55% (240 MW).

Total C&I shopping in Maryland covers about 3,241 MW, or 49% of their load, with smaller customers buying less than 5% and midsize customers buy 31%. The total is up slightly from the 3,078 MW (47%) that was competitively sourced in February.

Residential customers in Maryland are buying only 129 MW, or 2.1% of their load, from marketers, and almost all of that shopping occurs in Pepco territory, where Pepco Energy Services has been aggressively marketing to customers.

Maryland's shopping statistics could show an increase in coming months, since the utilities' annual solicitation drew higher-priced power than in 2004. Utilities use those supplies to provide standard-offer service, so customers that stay with their utilities will see rate increases ranging from 6.6% to 14% (PMW, 27 June, 1). That affects small and midsized customers, since the largest users pay hourly rates if they stay with their utilities.

Retail competition also continues to expand among big users in New York, where 54% of large time-of-use (TOU) customers are buying competitively, purchasing more than 72% of their power (1.4 million MWh/month) from marketers. Those figures reflect activity in March, the latest period compiled by the Public Service Commission, and show an increase from January, when 51% of large TOU customers were shopping, buying 67% of their power in the open market.

The new statistics also show a slight gain among small and midsized commercial customers. In January, about 14% were shopping, buying 37% of their power competitively, but by March that had increased to 15% and 41% (1.2 million MWh/month). Residential shopping is still low, at 5.7% of customers and 7.9% of load (216,000 MWh/month), which is about the same as in the earlier period.

In New York, utilities have divested most of their generation and buy almost all their power in the wholesale market, and rates largely reflect the fluctuations. As fuel costs have driven up power prices, shopping has expanded among larger customers. The PSC wants to see more shopping among residents, and is urging utilities to adopt programs in which they assume billing and other administrative costs, to make serving small users more viable for marketers (PMW, 11 April, 10).

The District of Columbia continues to see vigorous shopping among large users since utility rate caps fell away at the end of 2004. In May, competitive suppliers provided 77% of non-residential load, or 1,390 MW, the highest level since the District started retail competition in 2001. Residential shopping is still minimal, however, with marketers supplying only 4% of residents' load, or 19 MW.

In New Jersey, 1,481 residential customers and 8,757 nonresidential customers were shopping in February, the most recent month figures from the Board of Public Utilities are available. Marketers supplied 3,099 MW of load competitively in February, the BPU said.