PennFuture's E-cubed is a commentary biweekly email publication  concerning 
the current themes and trends in the energy market.  

October 4, 2000
Vol. 2, No. 20
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Electricity,s Oktoberfest
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Pennsylvania retail market survives summer and  grows
The latest shopping statistics on Pennsylvania,s market show  that as of 
October 1, more customers than ever have switched to a competitive  supplier 
in Pennsylvania. Up from the 528,000 customers that had switched by  July 1, 
now more than 551,000 customers have chosen competitive suppliers. This  
increase in customers that have switched is impressive given the unfavorable  
summer wholesale market conditions. Even more impressively, in Duquesne Light,
s  service territory, 33% of residential customers have now switched. 
Nineteen  suppliers are competing for residential customers in the PECO 
service territory.  New Power entered the PECO market in September and is 
aggressively advertising  and marketing, including offering frequent flyer 
miles to its customers. Do not  expect that any of this good news will make 
headlines around the country. But  count on those that support the California 
approach to restructuring (they are  still peddling their snake oil) to keep 
misrepresenting Pennsylvania,s electric  competition policy and bashing 
Pennsylvania,s market.
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Mack and ECAP re-enter the green market 
The Energy  Cooperative Association of Pennsylvania (ECAP) and Mack Services 
have re-entered  the green power market in the PECO Energy service territory, 
offering a 100%  Green-e certified renewable energy product for 6.37 
cents/kWh. A typical  residential consumer would pay a mere 14 cents more per 
day to purchase a 100%  renewable power product from one of these suppliers. 
Mack and ECAP join Green  Mountain Energy Company, which continued to accept 
new customers throughout the  summer, as the three suppliers offering Green-e 
products in the PECO area. Green  Mountain also has dropped the $3.95 per 
month customer service charge in the  PECO service territory, thereby cutting 
the cost of its 100% renewable energy  product by more than 10%. This is a 
good time to switch to these attractive  renewable energy products, which 
avoid an amount of pollution equal to not  driving 20,000 miles,? taking 1.7 
cars off the road, or planting 950 trees.  See our website at 
www.pennfuture.org  for a switching kit.
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New investment for Green Mountain
This week Green  Mountain Energy Company announced that it has received a 
$53.5 million  investment from Nuon, the largest utility company in the 
Netherlands. Nuon joins  BP Amoco with significant stakes in Green Mountain 
Energy. Sam Wyly also  announced that he was resigning as the Chairman of 
Green Mountain Energy,s Board  of Directors.
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Hopefully the new investment and board membership are preludes to more  
marketing activity in Pennsylvania for renewable energy products.
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Adversity to triumph
In another striking development in  the renewable market, one of 
Pennsylvania's early modern-era renewable  generators will most likely stay 
in business, despite the recent ending of a  long-term PURPA contract. Since 
1985, the Lebanon Methane Recovery project has  been operating effectively to 
convert into electricity the landfill methane that  would have gone directly 
into the atmosphere. After the 15-year PURPA contract  ended last year, the 
facility was not able to sell its output in the PJM  wholesale market at 
prices high enough to stay in business. Its closing was  imminent when 
PennFuture was first contacted. The plant will likely now remain  open as 
PennFuture arranged a project that will keep middleman expenses to a  
minimum. The methane generator will sell directly to Mack Services Group, a  
licensed wholesaler and retailer which will sell a 100% renewable Green-e  
certified product to an aggregation of churches in the PECO service 
territory.  By averting the shutdown of the facility, this project directly 
avoids the  emission of methane * a greenhouse gas that is four times more 
potent than  carbon dioxide (CO2). The generation of electricity from this 
project also  produces approximately 141 fewer tons of nitrogen oxide, 472 
tons less sulfur  dioxide, and 57,000 tons less CO2? than are emitted by the 
generation of  average system power.
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Lebanon Methane and Mack Services have agreed to price the transactions so  
that a reasonable profit is made, while selling at a price that enables most  
congregations to save as much as 10% off the price they would pay for mostly  
coal and nuclear generation from PECO. Adding more small renewable 
generators  and additional congregations may expand this project in the 
future. 
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Allegheny Energy joining PJM?
Allegheny Energy,  operating in Pennsylvania, western Maryland, and West 
Virginia, must by October  15th inform? FERC and the Pennsylvania Public 
Utility Commission (PUC)  about which Regional Transmission Organization or 
Independent System Operator  that it will join. Important legislators like 
Rep. Tulli and key regulators like  the PUC have been sending the 
unmistakable message that Allegheny Energy would  be well advised to join 
PJM. Last month, on the verge of briefing the PUC about  its ISO plans, 
Allegheny Energy was told not to come to Harrisburg unless it was  going to 
give two thumbs up on PJM. No car from Hagerstown, MD headed northeast  that 
day. If Allegheny Energy does become part of PJM, Duquesne Light would  
likely follow suit. Expanding PJM to cover western Pennsylvania is vital to  
Pennsylvania,s economy and future. Encouragingly, officials in Harrisburg  
increasingly understand the importance and urgency of this matter. 
Hopefully,  Allegheny Energy also understands the determination to ensure 
that PJM expands  to include western Pennsylvania.
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Trouble blowing in the wind
Recently Allegheny Energy  was asked to provide the same energy scheduling 
treatment for a proposed wind  farm in Fayette County that is accorded to a 
similar wind farm now operating in  neighboring Garrett, Somerset County. The 
Garrett wind farm is located within  PJM and its need for scheduling 
treatment that reflects the intermittent nature  of wind power has been 
accommodated by GPU and PJM. Allegheny Energy refused to  provide the same 
treatment given to the Garrett facility and, as a result, has  certainly 
delayed the project and put at risk the income to farmers, local tax  
revenues, good jobs and clean energy which the nearly 15 megawatt wind farm  
would create. The primary reasons Allegheny Energy gave for its refusal were  
that its control area is too small and that it lacks a liquid spot market. 
Guess  what? Both problems would vanish if Allegheny Energy joins PJM. The 
only glimmer  of hope for avoiding an unfortunate regulatory fight is that 
Allegheny Energy  said it would discuss this matter further after October 
15th. Let,s hope for all  concerned that the ides of October bring glad 
tidings.
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Duquesne POLR II collaborative to begin October 14
The  recent decision by the Pennsylvania PUC to send the Duquesne POLR II 
proceeding  to a collaborative commences with the first session October 14th. 
The  collaborative is expected to wrap up in November. At stake is the most 
ambitious  and successful retail choice transition of any EGS in the U.S. 
(see E3, Vol. 2,  No. 18, Sept. 11). The Duquesne plan would increase present 
shopping credits by  31% on a system average basis as well as provide a 17% 
system average and 21%  residential rate cut for customers, whether or not 
they are shopping. Between  the rate cut and savings from shopping, 
residential customers may be able to  reduce their rates by 36% when compared 
to those in effect prior to competition.  Among a host of other issues, 
parties to the collaborative are now raising the  issue of Duquesne's 
membership in PJM. Presumably, if Duquesne's transmission  assets are moved 
into PJM, then Orion's generation bundle will also be in PJM.  If Allegheny 
and First Energy were to join PJM, Duquesne's membership in PJM  would bring 
all Pennsylvania generation mWs into the same ISO. 
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GPU)First Energy merger
In another ISO-related  decision, First Energy, part of the flawed Alliance 
"ISO" filing, will file  their merger plans with FERC and the Pennsylvania 
PUC this month. First Energy,  as a possible Alliance member, is not slated 
to join a fully functioning ISO for  some time. The GPU merger gives First 
Energy a chance to join PJM. This would  expand PJM,s geographic coverage to 
Toledo, Ohio. Whatever the reason for First  Energy,s delay in joining PJM, 
it is not for lack of cash flow or merger  synergies. First Energy,s 
presentation to Wall Street on the GPU merger notes  that in their previous 
merger, 1997's Ohio Edison-Centerior union, First Energy  promised synergies 
of $1 billion and states that it has already delivered $700  million, with 
$350 million/year in annual recurring savings. The presentation  tells only 
half the story: First Energy's promise to the Ohio PUC in that merger  was to 
join a functioning ISO. That promise now can be kept with First Energy  
joining PJM.
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Little known fact about PECO shopping credits
A recent  analysis of seven churches in the PECO service territory showed 
that, because of  usage variations and the demand factor charge, shopping 
credits ranged from 5.33  to 10.69 cents/kWh. Looks like a good opportunity 
for savings in green  power.
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ICAP update
As high as $350 mW/day, this past summer,s  ICAP prices were due 
substantially to de-listing of capacity resources for sale  into neighboring 
power pools. The de-listing of capacity resources can explain  why ICAP 
prices skyrocketed this summer, when daily energy prices were lower  than 
expected, as were year-ahead energy prices in the forward market. The  impact 
of de-listing on prices and reliability was discussed in a recent PJM  Future 
Adequacy Working Group (FAWG) meeting, where it was revealed that  de-listing 
could have presented a problem had demand in PJM been consistently  high. 
Despite the FAWG acronym, even with a north-Jersey accent there is no  cloud 
in this group's direction: Most forward-looking participants expect that  the 
de-listing market maneuver will be limited by a requirement that ICAP be bid  
once or twice a year (with a daily market for changes in ICAP 
responsibility).  This way, if a generation owner decides to de-list his 
resource to chase higher  energy prices in other markets, the owner foregoes 
ICAP for a full year or most  of the year (if the commitment period is 
semi-annual as opposed to annual).  Beyond this fix for next summer, we 
predict that the FAWG will embrace the  elimination of ICAP for 2002. 

E-cubed is available for reprint in newspapers and other publications.  
Authors are available for print or broadcast.
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PennFuture, with offices in Harrisburg, Philadelphia and Pittsburgh, is  a 
statewide public interest membership organization, which advances policies 
to  protect and improve the state,s environment and economy. PennFuture,s 
activities  include litigating cases before regulatory bodies and in local, 
state and  federal courts, advocating and advancing legislative action on a 
state and  federal level, public education and assisting citizens in public 
advocacy.  
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