AEA Utility Management Conference
Smart Sourcing of Electricity Supply
March 13, 2013
John Berg-Manager MidAtlantic Sales
Mobile: 732.259.9072
Office: 732-494-0089 x226
John.berg@directenergy.com
Who is Direct Energy Business?
Direct Energy Business is one of North America’s leading competitive energy
suppliers offering:
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–
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Highly competitive supply rates
Flexible product options
Expert advice
Unparalleled customer service
KEY FACTS
• 25 years of industry experience
• 180,000+ customers of all sizes
• $4 billion company providing
electricity and natural gas supply
• Headquartered in Pittsburgh, PA
FOR THE COMMUNITY
Each year, Direct Energy donates over $1.8
million to charitable organizations across North
America through corporate donations in the
areas of finding solutions to homelessness,
energy poverty, climate change, and supporting
employee charitable endeavors.
2
Developing a Procurement Strategy
Consideration of Your Needs and Current Supply Arrangements
Risk Tolerance
Operational Concerns
Business and Financial Needs/Requirements
Development of Procurement Strategy
Evaluation of Competitive and Default Supply Options
Development of Budgetary Expectations and Internal Procurement Requirements
Analysis of External Market and Regulatory Conditions
3
PSEG Power Cost Components
4
Energy
5
Capacity – RPM – UCAP – Locational Reliability
$/MW-D
COMED
AEP
DAY
DUQ
PSEG
JCPL
AECO
RECO
DPL
PECO
BGE
APS
PPL
METED PENELEC FE_PP FE_OH
DEOK
PY12-13
16.74
16.74
16.74
16.74
157.73
143.06
143.06
143.06
171.27
143.06
133.42
133.42
133.42
16.74
133.42
133.42
133.42
20.46
20.46
16.52
PY13-14
28.37
28.37
28.37
28.37
250.12
250.12
250.12
250.12
250.12
250.12
231.08
244.74
244.74
28.37
232.07
232.07
232.07
28.37
28.37
28.37
PY14-15
128.17
128.17
128.17
128.17
170.24
137.61
137.61
137.61
145.32
137.61
137.60
137.60
137.60
128.17
137.60
137.60
137.60
128.17
128.17
128.17
PY15-16
134.62
134.62
134.62
134.62
165.78
165.78
165.78
165.78
165.78
165.78
165.78
165.78
165.78
134.62
165.78
165.78
165.78
294.03
294.03
134.62
$/MWh (50% LF) COMED
PEPCO_DC PEPCO_MD
AEP
DAY
DUQ
PSEG
JCPL
AECO
RECO
DPL
PECO
BGE
APS
PPL
METED PENELEC FE_PP FE_OH
DEOK
PY12-13
1.40
1.40
1.40
1.40
13.14
11.92
11.92
11.92
14.27
11.92
11.12
PEPCO_DC PEPCO_MD
11.12
11.12
1.40
11.12
11.12
11.12
1.71
1.71
1.38
PY13-14
2.36
2.36
2.36
2.36
20.84
20.84
20.84
20.84
20.84
20.84
19.26
20.40
20.40
2.36
19.34
19.34
19.34
2.36
2.36
2.36
PY14-15
10.68
10.68
10.68
10.68
14.19
11.47
11.47
11.47
12.11
11.47
11.47
11.47
11.47
10.68
11.47
11.47
11.47
10.68
10.68
10.68
PY15-16
11.22
11.22
11.22
11.22
13.82
13.82
13.82
13.82
13.82
13.82
13.82
13.82
13.82
11.22
13.82
13.82
13.82
24.50
24.50
11.22
30.00
Capacity Price Curve $/MWh - 50% Load Factor
COMED
AEP
25.00
DAY
DUQ
20.00
PSEG
JCPL
AECO
15.00
RECO
DPL
10.00
PECO
BGE
5.00
PEPCO_DC
PEPCO_MD
APS
0.00
PY12-13
6
PY13-14
PY14-15
PY15-16
Market/Regulatory Changes
Scarcity Pricing
Took effect on 10/01/201
Minimal impact to pricing (~3¢/MWh)
Not explicitly modeled into Cogs
Generation Deactivation a.k.a. RMR
22 GWs of coal capacity retirements expected for all US through 2015; of which 11 GWs in
PJM
Stringent EPA regulations on existing and future new coal gen; namely MATS
Low commodity price environment
NITS-related cost re-allocation
Ferc filing, pending Commision approval in Spring 2013
Proposal to change the allocation of costs for RTEP projects
Costs expected to remain the same for PJM as a whole; impact will be significant shuffling
of costs among load zones
7
Supply Side Flexibility to Demand Initiatives
Demand Side Initiatives
• Renewables
• Co-Generation
• Demand Response
• Energy Efficiency
Product Flexibility
• Fixed price provisions
• Time-of-use vehicles to navigate price
signals associated with demand-side
activity
• Encourages demand–side activity
without penalty
8
Implementation
Implementing Strategy and Supplier Selection
Final Selection of Product and Hedging Strategy
Timing of Purchase and Term
Ensure Transparency
Implement a Competitive Procurement Process
Benchmark and Improve
9
Questions and Answers