Direct Energy to sell electricity in National Grid's service area

NEW YORK STATE - Direct Energy, an energy supplier that provides electricity and natural gas to more than 1 million U.S. customers, plans to start selling power to residential and commercial customers in National Grid's service territory.

The Stamford, Conn.-based energy services firm will start offering electric service to residential customers in a few weeks, possibly as early as the end of this month, company officials said recently.

Direct Energy hasn't set the prices it will charge residential customers in National Grid's service territory, which includes much of the Buffalo Niagara region, said Michael Beck, Direct Energy's vice president of sales and marketing.

The company has no plans to sell electricity in New York State Electric & Gas Corp.'s service territory. The Binghamton-based utility is fighting to convince state regulators that it should be able to continue offering fixed-price electric service, which has remained popular with consumers.

The state Public Service Commission, which is trying to encourage competition in the state's energy markets, is pushing for most New York utilities to offer variable-rate plans that fluctuate with changes in the market price of electricity.

"We really believe that the commission is right and that the utility should not have a fixed-price option as the default service," said James Steffes, Direct Energy's vice president of government and regulatory affairs.

While more than two-thirds of the big industrial customers and nearly a quarter of the small commercial accounts are buying their electricity from energy services companies, the residential market has been much slower to develop. Only 6 percent of National Grid's residential accounts are buying their electricity from an independent supplier, according to PSC statistics.

Direct Energy, which is owned by British energy firm Centrica PLC, also plans to offer natural gas service in New York later this year, Beck said.

Direct Energy joins a roster of 13 other energy services companies that currently offer electric service to National Grid's residential customers in the Buffalo Niagara region.

Several suppliers offering power generated from environmentally friendly sources have fixed-price plans that are more costly than the utility's rate. Most of the others offer variable-rate plans that could beat, or cost more, than the utility's rate, depending on fluctuations in commodity prices.

Before last year's spike in energy prices, state regulators said inflation-adjusted power prices for residential customers dropped by an average of 16 percent from 1996 to 2004, a PSC report issued last week found.