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********************************************************************* Learn about SCIENTECH'S most popular competitive tools, including the=20 E-Commerce and Telecommunications InfoGrids at: http://www.consultrci.com or call Chris Vigil (505) 244-7605 ********************************************************************* Reach thousands of utility analysts and decision makers every day. Your company can schedule a sponsorship of IssueAlert by contacting Nancy Spring at nspring@scientech.com or (505)244-7613. Advertising opportunities are also available on our website. ********************************************************************* =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D= =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D= =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D SCIENTECH IssueAlert, November 30, 2000 TNPC Wins Pennsylvania Customers, Continues to Go Green By: Will McNamara, Director, Electric Industry Analysis =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D= =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D= =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D TNPC, Inc., parent of The New Power Company, reported that the Pennsylvania Public Utility Commission approved the "Competitive Default Service Agreeme= nt" between The New Power Company and PECO Energy for almost 300,000 customers. The PUC is expected to issue a final order on this matter in the next few days. ANALYSIS: As you may recall, a dispute erupted between TNPC and Green Mount= ain about a month ago over this large number of customers in PECO Energy's service territory. Under a regulatory mandate from the Pennsylvania PUC, PECO had initiated an auction for the approximately 300,000 residential electricity customers who had not selected a competitive energy service provider registered within the state. This represented about 20 percent of PECO's residential customer base. Three energy providers=01*TNPC, Green Mountain and one other unidentified company=01*bid for the customers with various service packages. PECO chose TNPC, which had offered a fixed discou= nt of 2 percent for the residential customers, because it believed the offer was in the best interest of PECO customers. Green Mountain contested this decision, arguing that its hydro- and natural gas-based energy package would ultimately be "less expensive for consumers and environmentally cleaner." Green Mountain also claimed that its proposed offer was a full 2 percent less than PECO's shopping credit, compared to TNPC's offer which would average about 1.83 percent below the shopping credit. PECO's response was that Green Mountain had missed the deadline for the auction and consequently did not present a valid offer. Over the last month, both Green Mountain and TNPC fought hard for PECO's customers, which was understandable as Pennsylvania represents arguably the most=20 successful retail market in the United States, if not the world. The PUC ruling clearly puts the 300,000 PECO customers into the hands of TNPC, which of course is the product of the residential retail marketing alliance between Enron, AOL and IBM. Securing the 300,000 residential=20 customers in one swift motion is a significant achievement for TNPC and gives it a substantial market edge over other energy service providers in the=20 Pennsylvania market. The customers will be randomly selected from those that have not shopped for an alternative supplier under the state's electric competition program. However, what I find most interesting about the latest development in this case is what's happening behind the scenes of the dispute, and more=20 specifically how TNPC continues to move toward a renewables perspective. I discussed just two weeks ago (IssueAlert from Nov. 13) that TNPC's stock (NYSE: NPW) was taking a nosedive. Keep in mind that the stock had a terrific IPO in early October. TNPC's IPO offering of 24 million common shares was priced at $21 per share, a surprisingly strong showing for a company that has only been in existence since May of this year. Momentum grew as the first day of trading saw the stock price climb to $27. Yet, contrast that with the current stock price of $6 3/8 (as of Nov. 30), and certainly questions about where TNPC will go from here start to emerge. The decline in TNPC stock seemed to start when the company reported a 3Q loss of $69.9 million, or $2.96 per share. TNPC argued that the losses were not meaningful due its limited operating history, but investors seemed to think otherwise. Around the same time that TNPC's stock began to drop, the company announced that it would be adding wind-generated energy to its package for customers in the Philadelphia area. Under terms of a brand-new agreement, TNPC will market wind power supplied by Community Energy from a site under developmen= t in the mountains of northeast Pennsylvania. My reaction to this announcemen= t was that TNPC's addition of wind power to its portfolio was an attempt to quell further objections from Green Mountain. Yet, TNPC's move toward renewable energy now appears to be an attempt to save its sagging stock price. In another ironic twist, TNPC also announced that it is forming a partnersh= ip with Green Mountain, which was an adversary only last month. TNPC disclosed that it is in negotiations with Green Mountain regarding the disposition of up to 50,000 competitive default service customers (out of the 300,000) within PECO's territory. Reportedly, the relationship will benefit=20 Pennsylvania consumers and help TNPC and Green Mountain to achieve their business goals. In addition, TNPC claims that working with Green Mountain in this manner is consistent with its objective of enhancing a "positive customer portfoli= o value." However, considering that TNPC fought so hard to obtain all of the 300,000 customers from PECO, it seems odd that the company would sudden= ly be willing to share 50,000 of them with Green Mountain. Certainly, Green Mountain wins from this partnership. The company gains 50,000 residential customers when it, based on the PUC's ruling, could have ended up with nothing. The company offers three service packages in Pennsylvania: EcoSmart, EnviroBlend and Nature's Choice, varying mixes of hydro, natural gas and new renewables, with Nature's Choice containing more renewables than the other two power blends. Marketing power that it bills as "dramatically cleaner than typical Pennsylvania electricity," Green Mountain may be able to expand its reach in the state by attracting energy customers who seek out environmentally clean energy. What remains very unclear is TNPC's true motivations and the future of the company, which made such a big splash when it began operating last spring. Is this a classic case of an energy start-up chasing down trends (e.g., the current high value of renewable energy stocks) in order to=20 rejuvenate itself, or a true identity transformation? The questions are pertinent as long as TNPC continues to generate losses and its stock continues to struggle. =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D= =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D= =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D Learn more about SCIENTECH's Strategic and Competitive Intelligence product= s and services at: http://www.consultrci.com/web/rciweb.nsf/web/Depts-SI.html =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D= =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D= =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D SCIENTECH is pleased to provide you with your free, daily IssueAlert. Let us know if we can help you with in-depth analyses or any other SCIENTECH information products. If you would like to refer a colleague to receive our free, daily IssueAlerts, please reply to this email and include their full name and email address or register directly at: http://www.consultrci.com/web/infostore.nsf/Products/IssueAlert Sincerely, Will McNamara Director, Electric Industry Analysis wmcnamara@scientech.com =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D= =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D= =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D Feedback regarding SCIENTECH's IssueAlert should be sent to=20 wmcnamara@scientech.com =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D= =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D= =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D SCIENTECH's IssueAlerts are compiled based on independent analysis by=20 SCIENTECH consultants. The opinions expressed in SCIENTECH's IssueAlerts are not intended to predict financial performance of companies discussed or to be the basis for investment decisions of any kind. SCIENTECH's sole purpos= e in publishing its IssueAlerts is to offer an independent perspective regard= ing the key events occurring in the energy industry, based on its long-standing reputation as an expert on energy and telecommunications issues. Copyright 2000. SCIENTECH, Inc. If you do not wish to receive any further IssueAlerts from SCIENTECH, pleas= e reply to this message and type "delete" in the subject line.
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