Friday, August 28, 2009

Aggregation of Electricity

I have researched Dominion Retail, Inc. and the subject of electric aggregation and these are my thoughts right now.

The biggest negative is that when we go off our local utility, Duke Energy, we are involved with derivatives promised by an unknown counterparty. Dominion Retail, Inc. itself is a trading company with no generation of its own. My understanding is that they will simply buy futures to cover the new clients they sign up away from Duke Energy. Dominion's parent company does have a substantial power generation business in the northeast.

So by going with Dominion you are replacing "the generation component" of your local utility with a trading company's promise. In our case, with the offer Dominion sent this week, good until December billing in 2010.

There are blogs out there badmouthing Dominion Retail Inc.'s offer in Massachusetts in late 2008. The offer turned out to be good only for about two weeks (when the year ended). And the local utility was due to have a rate reduction on January 1, 2009, which Dominion did not inform the ratepayers. So Dominion Retail, Inc. is not above "playing games."

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