Purchasing Energy and Related Services in a Restructured Electricity Industry William Golove, Charles Goldman, and Steven Pickle Lawrence Berkeley National Laboratory, Berkeley, CA ABSTRACT This paper presents an analysis of approximately thirty Request for Qualifications/Proposals (RFQ/RFPs) for electricity and related energy services issued by a mix of government, large commercial and industrial energy consumers. We evaluate the RFQ/RFPs on a variety of issues such as: economic sector of issuer, specific services requested, pricing approaches, and criteria used to select service provider. We have augmented our analysis with a series of interviews of representatives of the issuing firms. These solicitations are useful in understanding revealed preferences of large customers as retail competition develops. These solicitations also enable us to evaluate a variety of efficiency-related issues, such as potential roles for energy service companies (ESCOS), the specific efficiency services desired, and concerns regarding purchasing power and efficiency services from single suppliers. Initial findings include: (1) solicitations have a number of uses beyond simple purchase mechanisms, such as learning about the emerging market and influencing legislators and regulators; (2) a variety of pricing approaches are emerging depending, significantly, on the objectives of the potential purchaser; (3) providing a “green power” option is important to many aggregators intending to include residential customers in their aggregations; and (4) customers appear interested in exploring a wide variety of value-added services, in addition to the purchase of commodity electricity. Introduction Across the country, a majority of states are moving to restructure markets for electricity and related services. Three primary approaches to restructuring have emerged: (1) the initiation of pilot programs designed to open relatively small portions of the market, both in terms of range of services and customer base, to retail competition and to test a set of market rules for later adoption under fill retail competition; (2) opening segments of the market to competition over time, both in terms of loads and unbundled services, or “phase-in”; and (3) the initiation of full retail competition on a future date certain. Some states (e.g. Massachusetts) have chosen to utilize both a pilot program and phase-in, while others (e.g. New Hampshire) have proposed to move directly from pilot programs to full competition, and one (California) has introduced full retail competition without the benefit of pilot programs or a competition phase-in. Other states (e.g. Oregon) have instituted pilot programs prior to determining the future steps in the restructuring process. Increased customer choice resulting from restructuring has already begun to have an impact on the suppliers of electricity services. There have been increases in the number and types of suppliers in a number of states (even as there are mergers in consolidations across the industry) and innovations in the pricing, rate of development, and variety of service bundles. The industry trade press and academic literature has generally focused on the “supply side” of the transformation of the electric utility industry (e.g., announcements of strategic alliances, new products and services). Purchasing Energy and Related Services in a Restructured Electria”ty Industry -6.81