Customers Emphasize Flexibility, Savings as Key Retail Choice Benefits

June 2004

On June 15, the Mid-Atlantic Regulatory Conference (MARC) hosted a panel of customers and customer advocates to discuss their experiences with retail choice.

According to Aaron Rosha, business analyst responsible for energy procurement for all Target stores (1,249) in the U.S., of the 521 Target stores purchasing electricity through a competitive supplier in 2003, the average electricity savings were 10% compared to the tariff rates. Target stores purchase electricity from three Alliance for Retail Choice members: Constellation NewEnergy, Strategic Energy, and Reliant Energy.

"The impact of retail electricity choice savings for Target is like getting electricity for over 50 stores free each year," Rosha noted.

Richard Lewis, Deputy Executive Director of the Ohio School Boards Association, part of a collaborative opt- in aggregation buying group called "SchoolPool" that represents over 100 of Ohio's school districts, said that participating Ohio schools on average have saved approximately 15% off their electric bills by purchasing their electricity from Alliance for Retail Choice member Strategic Energy.

Lewis added, "When Ohio first started considering electric deregulation, we were mostly concerned about the tax consequences and economic impact to public schools. We had a lot of questions." However, Lewis said their approach was to get involved and do their homework. "More than three years later, the electricity savings we have realized by purchasing electricity through Strategic Energy have meant tangible benefits, allowing a typical school district to buy an entire textbook series, one school bus, 85 computers or to pay the salary and benefits for two teachers, or educate six kids for one year. We would not want to take any steps back in terms of re- regulating electricity," Lewis added.

While the savings each customer described were important, they also emphasized the importance of other benefits they have derived from retail choice. As Rosha pointed out, retail electricity choice has given Target stores flexibility around how they buy power - they can hedge and enter into a fixed price option contract, or they can consider pursuing an indexed price and discuss locking in a price over time.

"Because of retail choice, we consider buying green power more readily. We can justify a slightly higher green power price to our management, because we have savings from competitive offers that offset green power purchases," Rosha explained.

For an in-depth article on customer feedback on retail markets from regional regulatory panel discussions, see our upcoming July newsletter.

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