Nationwide survey
Date: Thursday, May 30, 2002 @ 23:06:00 GMT
Topic: General

Businesses in U.S., already buffeted by soft economic conditions, the after-effects of September 11 and the Enron fallout, no longer welcome electricity deregulation, according to a new independent national survey.

A majority of key accounts - the largest multi-site energy users - register disenchantment with deregulation, according to the survey. For example, a third of the businesses sampled (34 percent) feel deregulation should be postponed indefinitely, while another 17 percent want states with choice to turn back the clock and return to regulated markets. Only 35 percent believe the rest of the country should accelerate or stay the course to deregulate electricity markets...

These results are part of the year-end 2001 national surveys of business customers conducted by RKS Research & Consulting, an independent market research and public opinion polling organization based in North Salem, N.Y. RKS completed individual telephone interviews with energy managers at 805 medium-to-large U.S. businesses, plus 402 key account customers during November, 2001. The data from these RKS national customer assessments are now being reported to clients nationwide.

"These latest findings confirm, for the first time, that customers in regulated markets are no longer looking forward to having choice" said David J. Reichman, RKS president. "Many of the causes of this loss of momentum can be traced back to self-inflicted decisions by energy suppliers. For example, repeated reorganizations, name changes and cost-cutting at the customer service level seem to be disrupting the continuity and relationship-building so vital to retaining larger business customers."

(Source: Electric Light & Power, May 2002)

In other news:

New energy technologies drive the future of the electric industry characterized by the growth and consolidation of the distribution business. "The future of the electric distribution business may unfold in ways that are far different from today's regulated utilities", says Bruce Humphrey, XENERGY VP and director of Crossed Wires. "Yet the ability of companies to address these possibilities and to pursue the opportunities is constrained by the reality of cost pressures, the uncertainties of regulatory oversight, and the increased pressure to grow earnings."...

AMSTERDAM, May 28 [Reuters] - Europe`s major utilities may still be buying their way across the continent but the big prize will be the lucrative United States energy sector, an executive from British utility Powergen said on Tuesday.

"There are still targets, even in western Europe, but the biggest opportunities will be in the United States," Tony Cocker, head of energy trading at Powergen told a conference.
"It`s the biggest electricity market in the world."

Powergen was recently bought by German giant E.ON for 8.2 billion euros [$7.60 billion], which has made no secret of its desire to grow in the United States.

E.ON Chief Executive Ulrich Hartmann has said the company is interested in the U.S. Midwest, which could complement Powergen`s Kentucky-based LG&E operations.

Cocker said the U.S. market, with more than 100 large utilities and 3,000 small ones, would continue to draw interest from the Europeans attracted to its fluid spot energy markets.
"Importantly, the market there is fragmented," he told the Energy and Power Risk Management conference, adding this gave more opportunities for investment.

German energy giant RWE , which is in the process of taking over UK utility Innogy , said recently it hopes to buy power stations in the United States where it has recently set up a trading business.

"We have a trading business in Houston and want to have economic control of assets," RWE vice president and head of multi-energy coordination Johannes Heithoff, told an energy conference in Rome earlier this month.

"We are looking for several thousand megawatts of power generation capacity," he added.

The European interest comes just as hard-hit U.S. companies pare back their European exposure after poor performances and worries about credit ratings force them to focus on their home markets.

The U.S. presence in Europe has shrunk with the dramatic collapse of Enron and the closure of Mirant`s European trading arm, although several U.S. companies still hold strong positions on the continent, including Duke Energy and AEP

Dynegy said earlier this month it was in talks to sell some of its British gas storage assets which it bought last year from BG Group .

[Additional reporting Margaret Orgill in London].
Source: Reuters English News Service , May 28, 2002

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