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Energy Distribution Companies and Economic Development in New England

This presentation by Michael Kagan, Vice President of Constellation NewEnergy, discusses the critical role of energy distribution companies in fostering economic development in New England. It delves into the Five Forces Model, emphasizing the importance of rivalries, buyer power, and capital competition among distribution firms. The session highlights strategies for enhancing competitiveness, such as regulatory stability and investment encouragement. It also examines how international players like RWE and E.ON enhance their growth through a multi-utility structure and competitive advantages in energy markets.

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Energy Distribution Companies and Economic Development in New England

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  1. Energy Distribution Companies & Economic Development in New EnglandMichael Kagan, Vice PresidentConstellation NewEnergy June 23th, 2006

  2. Five Forces Model – Industry Attractiveness Depends on the Interaction of the Forces Focus for today Source – Michael Porter

  3. Factors to Consider: Rivalry and Power of Buyers • For Distribution Companies; • Bargaining power of buyers of distribution services • Rivalry with other firms, particularly for capital • For New England Region • Rivalry with other regions, particularly for capital

  4. Competition for Capital • Competitive advantage in attracting capital allows distribution companies to: • Expand • Invest in new technology (the next ipod?) • Improve service • Provide substitute (competition) to generation resources

  5. International Distribution Company Scale & Strategy • Strategic Aspirations • …RWE AG is building a multi-utility structure into its core business…in key markets in Germany, the UK, Central Eastern Europe and North America. • …USA as long term growth opportunity • …convergence of power and gas markets …will be a key competitive advantage and driver of value creation. • A leading player can create more value from holding energy assets even in disconnected markets based on its experience and expertise… Source – E.ON, Strategy and Key Figures 2005 and RWE Annual Report 2005

  6. Policy Actions • Enhance ability of distribution companies and Region to compete: • Minimize regulatory uncertainty by making rules constant • Force consistency between distribution and ISO rules • Allow distribution companies to focus on core distribution capability and profit from all functions • Force competition where ever possible • Create stronger incentives for efficiency and profit • Facilitate investment in advanced metering

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