1. Energy Distribution Companies & Economic Development in New England Michael Kagan, Vice President Constellation NewEnergy
June 23th, 2006

2. Five Forces Model – Industry Attractiveness Depends on the Interaction of the Forces
Focus for today
Source – Michael Porter

3. Factors to Consider: Rivalry and Power of Buyers
For Distribution Companies;
Bargaining power of buyers of distribution services
Rivalry with other firms, particularly for capital
For New England Region
Rivalry with other regions, particularly for capital

4. Competition for Capital
Competitive advantage in attracting capital allows distribution companies to:
Expand
Invest in new technology (the next ipod?)
Improve service
Provide substitute (competition) to generation resources

5. International Distribution Company Scale & Strategy
Strategic Aspirations
…RWE AG is building a multi-utility structure into its core business…in key markets in Germany, the UK, Central Eastern Europe and North America.
…USA as long term growth opportunity
…convergence of power and gas markets …will be a key competitive advantage and driver of value creation.
A leading player can create more value from holding energy assets even in disconnected markets based on its experience and expertise…
Source – E.ON, Strategy and Key Figures 2005 and RWE Annual Report 2005

6. Policy Actions
Enhance ability of distribution companies and Region to compete:
Minimize regulatory uncertainty by making rules constant
Force consistency between distribution and ISO rules
Allow distribution companies to focus on core distribution capability and profit from all functions
Force competition where ever possible
Create stronger incentives for efficiency and profit
Facilitate investment in advanced metering