Rendell: Direct Energy Auction Proposal Deserves Consideration

Direct Energy's retail auction proposal to serve mass market customers at what would be the combined FirstEnergy Corp.-Allegheny Energy distribution companies in Pennsylvania should be considered "carefully," Pennsylvania Governor Ed Rendell said in a keynote to a National Energy Marketers Association roundtable.

As first reported by Matters, the auction is intended to address market power concerns in the merger.

Rendell said that the 1996 electric choice law "has worked" and took the opportunity to praise Direct Energy, and its decision to locate its business unit in Pittsburgh, as one of the economic benefits from the law.

The question of default service was at the forefront of NEM's roundtable discussion with Commissioner Robert Powelson stating that shopping will continue to be "anemic" due to customer stickiness as long as a default service mechanism remains in place. That being said, Powelson admitted that Pennsylvania will never have the "Texas model" for the treatment on non-migrating customers.

Though the PUC can designate an alternative default service supplier, Commissioner Wayne Gardner said that there would need to be movement among elected officials to get the distribution company out of the default service role.

Gardner further said that suppliers should not use the Price to Compare as a "crutch" in developing their business models, and said discounts of 2%, "wont cut it."