Retail Market Size Passes ERCOT

October 2004

Retail markets are growing steadily - both in customer participation and number of retail suppliers serving customers.

The national retail choice market is now larger than each of the following wholesale markets: Texas, California, New York and New England. In the last year, the competitive retail market has surpassed the size of Texas' ERCOT system for the first time.

A new KEMA, Inc. analysis projects that US retail power competition will grow by more than 50% by the end of the decade, from approximately 300,000 Gigawatthours at the end of 2003 to 475,000 by the end of 2009. The majority of the growth will come from a substantial increase in commercial and industrial customers purchasing power competitively in 8 to 12 states. The most active markets are expected to be in the Northeast, Mid-Atlantic and in Texas.

Three of the top 5 competitive retail electric providers serving commercial and industrial customers are Alliance for Retail Choice members: Constellation NewEnergy, Reliant Energy, and Strategic Energy.

Each of the top five competitive providers now serve between 2,500 to 10,000 MW of customer peak demand, equivalent to a mid to large sized regulated US utility. Over the past year, more than 20 firms have entered the competitive electric supply market while verteran suppliers have expanded in customer base and geographic scope.


Reliant Energy, Constellation NewEnergy Commit to Western PA

Alliance for Retail Choice members Reliant Energy and Constellation NewEnergy -- the two largest US retailers with a combined annualized volume under contract of 86 TWh -- announced plans last month to expand into the competitive retail market in Duquesne Light's service territory. Reliant Energy is the top U.S. retailer in terms of estimated annual volume under contract (44 TWh); Constellation has reported the largest peak load under contract (10,000 MW).
Reliant Energy announced plans to offer competitively priced electric service to large commercial, industrial, and institutional customers in Western Pennsylvania. Marketing activities will begin later this fall for service starting in January.

Reliant's decision to enter the market was prompted by the Pennsylvania Public Utility Commission's August and September orders in the Duquesne Light case. These orders approve a market design that removes barriers and allows competition to develop in the area. Of particular importance was the PUC's decision not to allow Duquesne's regulated provider of last resort service to become the only choice in the market.

"Put simply, competitive energy markets work," said Jim Ajello, senior vice president and general manager, Commercial and Industrial Marketing, Reliant Energy. "Competition ensures the lowest possible commodity prices and a variety of innovative product and service options."

Constellation NewEnergy President Clem Palevich said the Pennsylvania Public Utility Commission ensured that the nation's competitive power suppliers could establish a strong and sustainable business presence, serving large commercial and industrial customers in the Pittsburgh area.

"This was a critical ruling that helped to preserve Pennsylvania's commitment to vibrant and open power markets," said Palevich. "The PUC has shown a strong commitment to competition and that commitment gives us the confidence we need to invest here and grow our presence in this market.