PSEG CEO Cites "So Thin" Retail Margins

During an earnings call yesterday, in discussing PSEG's decision to wind down its retail business, which had been first exclusively reported by EnergyChoiceMatters.com earlier this month, Public Service Enterprise Group CEO Ralph Izzo described retail margins as, "so thin."

Discussing the wind down, Izzo stated that competitive retail, "was always a defensive play on our part, primarily targeted to trying to reverse some of the losses we've been realizing on, from the point of view of wholesale market basis differentials. With the start of the Keys plant, with the strengthening of gas prices in the M3 zone, we've seen some decreased harm from basis to our fleet, and the margins were so thin on the retail business as you know, I've never been a huge fan of it, that we just decided that it was not in our best interest to continue to pursue it."

In reporting third quarter earnings, PSEG stated, "[PSEG] Power recently decided to exit the retail electric marketing business, having entered the business two years ago to complement its wholesale trading business and provide additional hedges for its generation. Power has concluded that retail electric marketing will not provide a material enhancement to its hedging activity. Energy Solutions has therefore ceased taking on new customers but will continue to meet all obligations to existing customers through the end of their current contracts."