1. Dominion Retail Default Service for Smaller Customers
Post Standard Offer
Massachusetts Electric Restructuring Roundtable by
Rich Zelenko
January 28, 2005

2. Dominion Retail Profile
Dominion Retail is an affiliate of Dominion Resources headquartered in Richmond, VA.
Serve 1.2 million customer accounts in 8 states
Primary focus is the residential and small commercial market:
Electricity and natural gas
Warranty products and services
Dominion Retail is anxious to expand our market in Massachusetts

3. Dominion Retail Markets
Ohio
Gas ,048
Electric 86,957
Services 288,250
Customers:
395K Gas
250K Electric
512K Services
1.2 Million Total
Massachusetts
Electric ,888
Connecticut
Electric ,839
Pennsylvania
Gas ,246
Electric 131,048
Services 145,960
Illinois
Gas ,184
Virginia
Services ,831
West Virginia
Services ,415
North Carolina
Services

4. What Makes a Competitive Retail Electric Market?
A desire by the Commonwealth is to establish a true retail market that benefits consumers consistently over time.
A robust wholesale supply market
The price-to-compare is representative of retail market pricing.
Incumbent utility/PUC retail rules that are not overly burdensome and costly.

5. Why Limited Retail Competition in Massachusetts?
The “Playing Field is Not Level”
Price-To-Compare (PTC) is not reflective of Retail Offers – retail suppliers must include additional costs in their offer that are not included in the PTC.
Some Examples:
Bad debt
EDI data exchange- set-up/daily transactions/maintenance
Compliance w/consumer protections and notifications
Database capital investment and management
Attrition- auto replenishment of moves/relocations for default supplier (i.e. churn)
Supplier license, other misc.
Marketing costs/Customer Service costs

6. Why Limited Retail Competition in Massachusetts?
Other Retail HURDLES:
Acquisition Costs
Particularly residential and small commercial customers (acquisition costs range from $20 to $250 per customer)
Retailers must provide long term rate stability or a meaningful discount to get customers to act
Acquisition costs are the single largest retail hurdle for mass market customers
Customer List & Information
Unique identifier or account number
Significant acquisition cost reduction- increased sales rate of 20% if account no. not required from customers, more accurate enrollments
Processes for consumer protection have been implemented in other states that allow distribution of account numbers

7. “The Mastermind of New England”

8. Default Service – The “Ultimate” Game Plan
The default price needs to be exactly reflective of the market
The default price provides the lowest price possible to consumers
The default service has the lowest price volatility on the planet
Default supply needs to be derived from 100% renewables
The default service RFP always attracts several wholesalers with plenty of “extra” supply that provides market liquidity
The default service allows retail competition to flourish with lots of new products & services introduced and record setting switching
The default service and pricing decisions allow all politicians to win their election of choice

9. What is Needed Next in Massachusetts for Default Service
Dominion’s Recommendation- A Balanced Approach:
1. Define, bid and publish Default pricing for a one year term
Tweak current term to a one year fixed price- will allow consumers to make easier price comparisons and match their 1 yr term preference
Provides reasonable price stability
2. Begin appropriate rate unbundling - from distribution portion of rate.
3. Transition to a competitively bid Retail Auction
Start with one utility
Implement new programs/incentives to promote retail options- (ex. NIMO in NY)
Develop customer volunteer list for participation in a Retail Auction
Implement statewide Retail Auction with legislation – (i.e. Bosley/Morrissey proposal)

10. Summary – LT Benefits of Retail Competition
1. Better electric offers for varying consumer needs/segments
fixed long-term, fixed medium-term, variable, variable w/Cap, DSM, aggregation, renewables, switching incentives, fixed bill w/no true-up, etc.
New product & service innovations
home warranty products, metering technologies, DSM, distributed generation, etc.
Long-term competitive forces to keep prices in check
retailers will compete every day for customer’s business, looking at longer-term “life time” value of electricity and other products & services
New Generation investment tied to Retail load growth
Economic development- tailored/lower rates/incentives to site business,
use of local contractors for ancillary products & services
Retail competition improves service
customers reward good service (and punish bad service) quickly and efficiently