Proposed rebate could bring $1 billion to 2 million Pennsylvania customers

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Pittsburgh, August 20, 2010 – Direct Energy submitted a proposal today to Pennsylvania regulators to deliver on the original vision for electricity competition in the State and potentially return as much as $1 billion to electricity customers of First Energy Corp. and Allegheny Power in the process.

In its submission to the Public Utility Commission regarding the potential merger between First Energy and Allegheny Power, Direct Energy proposed that the state move forward with a fully competitive market, which would allow competitive energy retailers to better compete to serve customers.

Direct Energy and energy sector experts proposed that the PUC allow competitive energy suppliers to tender offers to serve the utilities’ existing customers. In doing so, the 2 million customers served by Met-Ed, Penn Power, Penelec and Allegheny Power could receive as much as $150 to $500 per account through a competitive process.

Under this proposal, the merged First Energy Corp. and Allegheny Power utility company would continue to focus on its core responsibilities by delivering electricity to customers, and responding to outages or other service-related emergencies, as they do today. They would no longer play a dominant role as the default service provider after the merger.

Pennsylvania is on track to become one of North America’s most competitive energy markets, recognized by energy sector experts for the commitment of its regulatory and government officials to the creation of a robust competitive market,” said Chris Weston, President and CEO, Direct Energy. “Today, Pennsylvania has an opportunity to reach this vision, and in doing so return significant value to almost 2 million electricity customers across the state. This money belongs to the customers, not to the system that they paid to create.”

Direct Energy is one of North America’s largest competitive energy and services companies and a leading residential and business electricity retailer in the state. Direct Energy’s proposal includes these three key elements:

* Allow competitive energy retailers to better compete to serve customers. While competitive energy suppliers are now operating in markets across Pennsylvania, the First Energy Corp. and Allegheny Power utility companies plan to continue to play a dominant role as the default service provider after the merger.

This type of service should be a “back stop”, not a “first stop” for customers in a fully competitive market. As a result of this ongoing role and other measures, which do not promote customer choice, only a small percentage of consumers are shopping for their electricity in the First Energy and Allegheny Power service territories.

* Allow competing suppliers to bid for the opportunity to serve customers’ energy needs. This process could potentially generate between $300 million to $1 billion dollars in funds, which should be returned to 2 million Allegheny Power electricity customers in Pennsylvania.

* Create a separate billing company. It would be responsible for performing the billing functions that the utility does today, as well as sending bills to electricity customers on behalf of their competitive supplier of choice.

At present, competitive electricity suppliers in the state are able to sell their products, but in most cases they are simply a line on the bill from the local utility.

The creation of a billing company would foster the development of innovative products and services to help customers manage their overall energy bill, assist with the state’s commitment to promote conservation and demand-response, while potentially translating into new jobs or the retention of existing jobs that might otherwise be lost to another state as a result of the proposed acquisition.

Direct Energy believes that these actions can be carried out while preserving all of the important consumer protections currently in place, as well as maintaining programs that benefit low-income customers.

“In addition to delivering innovative electricity products and helping to deliver the benefits of private sector investment in generation and energy efficiency technologies like smart meters, this proposal would keep, as well as potentially generate, jobs in Pennsylvania through the creation of a billing company,” concluded Weston.

Direct Energy is one of North America’s largest energy and energy-related service providers with over 6 million residential and commercial customer relationships. Direct Energy provides customers with choice and support in managing their energy costs through a portfolio of innovative products and services. A subsidiary of Centrica PLC, one of the world’s leading integrated energy companies, Direct Energy operates in 46 states and 10 provinces in Canada.

Direct Energy Residential and Direct Energy Business have about 300 employees in Pennsylvania. In 2009, Direct Energy Business located its North American headquarters in Pittsburgh, Pennsylvania. More recently, Direct Energy acquired Clockwork Home Services in June 2010, which has 29 small businesses in the State, employing as many as 215 people, and its affinity group members employ another 314 people throughout Pennsylvania.

 

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The Clarion Energy Content Team is made up of editors from various publications, including POWERGRID International, Power Engineering, Renewable Energy World, Hydro Review, Smart Energy International, and Power Engineering International. Contact the content lead for this publication at Jennifer.Runyon@ClarionEvents.com.

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