FirstEnergy Solutions Forecasts 400% Increase in Direct Retail Sales to Mass Market Customers

FirstEnergy Solutions is forecasting 6 TWh of direct retail sales to mass market customers (excluding government aggregation volumes) in 2012.

In 2013, FirstEnergy Solutions forecasts direct retail sales to mass market customers of 10 TWh, a 400% increase from the 2 TWh of direct, mass market retail volumes in 2011.

During an analyst conference yesterday, FirstEnergy Solutions reiterated that its target retail markets are Ohio, Pennsylvania, Illinois, Michigan, Maryland, and New Jersey. FirstEnergy Solutions relies on its own generation to meet its retail load in these markets, with the exception of New Jersey, eastern Maryland, and eastern Pennsylvania, in which FirstEnergy Solutions relies on market purchases.

FirstEnergy Solutions serves 1.9 million customers in these six states.

FirstEnergy Solutions also said that according to the most recent industry data, FirstEnergy Solutions now ranks #2 in both non-residential retail sales and in domestic electric-only residential sales.

Donald Schneider, President of FirstEnergy Solutions, noted that the growth has been organic, "which we have found to be extremely cost effective."

"While other competitors increase their customer count by acquiring retail sales companies, FirstEnergy Solutions has been able to achieve the same level of growth by utilizing internal resources at a fraction of the cost," Schneider said.

FirstEnergy's presentation to analysts (page 63) also includes forecasts for retail volumes of its other sales channels -- direct sales to large and medium customers, POLR sales, and sales to government aggregations.

FirstEnergy Solutions sees government aggregation sales growing from 16 TWh in 2011 to 17 TWh in 2012 and 22 TWh in 2013.

Schneider commented that, "regulators in Pennsylvania and in Maryland have not yet embraced governmental aggregation, which continues to be the most cost-effective method of bringing savings to residential customers."

Discussing other regulatory issues, FirstEnergy also cited Pennsylvania's recent proceeding on modifications to the utility/affiliate code of conduct, calling one aspect "troubling." Specifically, FirstEnergy said that the rules would contemplate that certain functions cannot be shared between a utility and an affiliated competitive supplier, including IT, legal and governmental affairs.

FirstEnergy said that such a prohibition on shared functions would increase costs to ratepayers by requiring ratepayers to fully fund those functions at the utility, rather than the affiliate sharing in the cost.