KEMA-XENERGY research finds 2002 banner year for retail electric competition

BURLINGTON, Mass., Jan. 9, 2003 — KEMA-XENERGY research released Thursday shows dramatic growth in US competitive electricity supply over the past 18 months, despite ongoing energy industry woes.

Since mid-2001, competitively priced electricity supply more than doubled. Customer market participation increased by about fifty percent, resulting in energy cost savings as high as 30 percent for some customers. Not only has customer activity increased, but retail providers are also becoming profitable.

KEMA-XENERGY experts presented research findings to industry managers and executives at the firm’s Retail Energy Markets (REM) meeting in Orlando, Florida. KEMA-XENERGY found that an estimated 40,000 megawatts (MW) of peak electricity demand are currently being competitively supplied, about a 166 percent increase from an estimated 15,000 MW being supplied about 18 months ago.

One MW is roughly equivalent to the amount of electricity used to power 1,000 homes. Customer participation in competitive markets is also on the rise. KEMA-XENERGY reported that since about mid-2001, an additional 700,000 (or about 50 percent more) customers switched energy suppliers for a total of about 2.1 million participating customers. This market participation has resulted in significant customer benefits.

“Business consumers have experienced substantial savings through energy market restructuring,” said Bruce Humprhey, KEMA-XENERGY vice president. “We have observed savings levels over the utility default rates in the 10 to 30 percentage range. Mass market customers have been slower to move to competitive offers, but savings are typically available in the 5 to 15 percent range.”

The Texas market leads the country both in terms of customer migration, new entrants and choice of competitive offers. Of the 40,000 MW switched in the competitive markets nationwide in 2002, Texas accounted for approximately 11,000 MW. By comparison, Illinois, California, New York and Ohio each accounted for over 3,000 MW. Texas customers have a wide diversity of offers and services to choose from and are spurring a rapidly growing renewable energy market.

“The Texas retailer success generally is attributed to the state’s approach to structuring the market rules,” stated Humphrey. “Retail success in turn is key for customer benefits. Looking towards Texas as a model, we can expect continued growth in the US competitive markets.”

KEMA-XENERGY’s Retail Energy Markets (REM) service is a multi-client research program on retail power markets. KEMA-XENERGY (http://www.xenergy.com ) is an energy consulting, information technology and energy services firm headquartered in Burlington, Massachusetts, with offices across the United States. The firm offers consulting services on a wide range of energy issues, and works with utilities, energy service companies, industrial and commercial customers, institutions and government agencies. Founded in 1975, KEMA-XENERGY is a wholly owned subsidiary of KEMA Inc.

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