Green Mountain pulls out of most California markets

Green Mountain Energy Co., which sells renewable energy to customers, said it is in the process of returning all but about 8,000 of its customers to California utilities. California Gov. Gray Davis ushered in the end of retail choice for electricity consumers when he signed a bill Feb. 1 that authorized the state to buy power on long-term contracts.


Ann de Rouffignac
OGJ Online

HOUSTON, Feb. 5� Green Mountain Energy Co., which sells renewable energy to customers, said it is in the process of returning all but about 8,000 of its customers to California utilities.

California Gov. Gray Davis ushered in the end of retail choice for electricity consumers when he signed a bill Feb. 1 that authorized the state to buy power on long-term contracts. Retailers already faced little room to maneuver because of frozen and extremely low retail rates established by lawmakers under the 1996 deregulation bill.

A few retailers such Green Mountain Energy Co., with specialized products, experienced some success in signing up customers. But the state was never considered a ripe area for retail customers despite its �deregulated� electricity markets.

Austin, Tex.-based Green Mountain had about 60,000 customers in the state, sources close to the company said. The 8,000 remaining customers remain with the company because Green Mountain signed long-term contracts for the electricity. The company has firm supply of electricity and can serve them at the fixed price of 8.5�/kw-hr.

�It�s a difficult situation,� says Eleanor Scott, spokeswoman. � We have returned our customers to the utilities.�

An amendment was attached to the legislation that �suspended� the entire retail market until further notice. The amendment attracted little attention because of the more overwhelming crisis in wholesale prices and reliability.

In addition to the new law, Green Mountain cited others risks to the market, including:

� The California Power Exchange index used by Green Mountain to price power is meaningless now that trading on the exchange has ceased.

� Wholesale prices are �stuck� at high levels as the market waits for state officials to set a course for state power purchases.

� Rate cap protection can no longer be assured for Green Mountain�s retail customers. Utilities have attempted to stop paying credits owed customers who have chosen an alternative provider.

Green Mountain was considered among the most successful, if not the most successful retailer in California. Other retailers such as Enron Corp. folded their retail tents early in the deregulation process. Should the state eventually straighten out its deregulation woes, it will not be easy attracting these companies back.

�We would have to take a long hard look at the market in California to return,� says Scott.

The company continues to market retail electricity in Pennsylvania, New Jersey, and Connecticut, has been certified to operate in Texas, and applied to enter the markets in Ohio.

(Contact Ann de Rouffignac at annd@ogjonline.com)

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