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Effective Retail POLR Design. Shahid Malik President and CEO. Quick Facts about Strategic Energy. OUR HALLMARKS Broad Industry Experience Deep Energy Knowledge Objectivity Honesty Integrity. Trusted retail energy provider to business, education and government

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Shahid Malik President and CEO

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Shahid malik president and ceo

Effective Retail

POLR Design

Shahid Malik

President and CEO


Quick facts about strategic energy

Quick Facts about Strategic Energy

  • OUR HALLMARKS

    • Broad Industry Experience

    • Deep Energy Knowledge

    • Objectivity

    • Honesty

    • Integrity

  • Trusted retail energy provider to business, education and government

  • Began energy consulting practice in 1986

  • Entered the retail electricity market in 1997 in Pennsylvania

  • Now serving more than 7,000 customers in ten states

  • Over $1.3B in annual revenue with no debt in capital structure

  • Serving 20 percent of the Fortune 500 companies

  • Customer demand currently at 4,000 MW peak

  • Natural Gas managed: 8,594,513 MMBtu


1 3 of us electricity demand is available to competitive suppliers and only 25 has switched

1

Total Available Market by State - 2004

1/3 of US electricity demand is available to competitive suppliers – and only 25% has switched.

Total Available 1,159M MWhs

CA 24

Other 54

AZ 25

CT 30

TX 209

OR 38

MA 47

MD 64

OH 136

NJ 75

Restructuring Active

Restructuring Delayed

Restructuring Suspended

Restructuring Not Active

Strategic Energy Serving Customers

MI 82

NY 135

IL 106

PA 133

Data Source: EIA


Polr designs are critical to competition

POLR Designs Are Critical to Competition

  • Many states exiting transitional periods

  • Competition lagging in shopping credit markets where utilities provide bundled service

Source: KEMA Inc.


Strategic s position on polr pricing

Strategic’s Position on POLR Pricing

  • Must be tied to the wholesale market

  • No risk/reward to the wires company

  • No switching restrictions on customers

  • POLR service priced separately from distribution rates


Texas s successful retail model

With Competitive Supplier

With Utility Affiliate

Texas’s Successful Retail Model

  • Unregulated POLR and Default Service

  • Full functional separation between wires and commodity services

  • Very high switching for 1MW+ customers

  • Highly competitive – more than 100 licensed suppliers and aggregators

Data Source: Public Utility

Commission of Texas


Successful models in pjm

Successful Models in PJM

  • Hourly pricing option for large customers

  • Administrative charge (“market functions charge”)

  • Declining threshold for hourly pricing

    New Jersey

    Percent of load served by competitive suppliers as of 12/04:

    Conectiv 96%

    JCP&L91%

    PSE&G80%

    Rockland64%


Competition spurring innovation

Natural Gas Price History

10.00

10.00

9.00

9.00

Cold

Long winter

Weather

8.00

8.00

and low

storage

7.00

7.00

Storage &

6.00

6.00

Production

Storage

Dollars per MMBtu

Dollars per MMBtu

Shortfall

5.00

5.00

Shortfall

4.00

4.00

3.00

3.00

2.00

2.00

Hurricane

1.00

1.00

Threat

0.00

0.00

1997

1998

1999

2000

2001

2002

2003

2004

2005

f:consult/ham/graphics/NYMEX History.xls

f:consult/ham/graphics/NYMEX History.xls

Competition Spurring Innovation

  • Ability to hedge portions of load based on market signals/risk tolerance

  • Sophisticated customers are tapping Portfolio and Demand Response services

  • Access to enhanced customer service, electronic billing, etc.

Data Source: NYMEX


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