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Too Much Clutch, Not Enough Gas Mary Beth Gentleman Foley Hoag, Attorneys at Law

When Can Competition Work? Massachusetts Electric Restructuring Roundtable In Joint Session With XENERGY’s Executive Forum Marriott Hotel, Newton MA May 18, 2001. Too Much Clutch, Not Enough Gas Mary Beth Gentleman Foley Hoag, Attorneys at Law

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Too Much Clutch, Not Enough Gas Mary Beth Gentleman Foley Hoag, Attorneys at Law

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  1. When Can Competition Work? Massachusetts Electric Restructuring Roundtable In Joint Session With XENERGY’s Executive Forum Marriott Hotel, Newton MA May 18, 2001 Too Much Clutch, Not Enough Gas Mary Beth Gentleman Foley Hoag, Attorneys at Law One Post Office Square, Boston MA 02109 (617) 832-1199 mgentleman@foleyhoag.com

  2. “End” of the “Transition” in Massachusetts March 1, 1998 + seven years = February 28, 2005 Midpoint = September 1, 2001

  3. What Will Happen as the New England States Reach the End of the Transition? “End” - defined by statute or by market conditions? “Transition” - transition to what? The market setting prices? Low retail prices? Low volatility?

  4. Retail Market Still in Its Infancy A. New Hampshire - PSNH began May 1, 2001; asset sales yet to be completed B. Maine - 62% of large C&I; 1% of medium; 1% of small/res. C. NJ shopping dropping: 1.4 % of residential customers and 4.4% among non-residential representing 9.7% of load D. NY increasing slightly: 5.3% of non-residential customers and 3.6% or residential customers E. Maryland .7% participating (3.7% of load)

  5. Too Much Clutch Wholesale market Wholesale Price Caps Retroactive Price Changes Anemic demand response programs Flawed governance structure leading to appeals and stays

  6. Too Much Clutch (continued) Retail market Standard Offer price trajectory Default Service product design Prohibition against consolidation, electronic billing by competitive suppliers Bill complexity contributing to customer inertia

  7. Not Enough Gas Asset sales not complete New units’ COD’s lagging Retail markets not developing Environmental regulation of existing and new plants diminishing availability Supply picture in New York may divert resources

  8. Solutions: Reject return to cost-of-service rate-making (How soon they forget….) Focus governmental and commercial resources on: Demand response Aggregation (Long-term contracts) Review tax policies on distribution, transmission, and generation companies’ assets and sales Release the clutch slowly while firmly stepping on the gas

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