Great stuff as always. I agree that there remains a question of where in the SG era marketplace utilities will participate. Much of that will be decided by the laws in the states as you mention Oncor and CenterPoint in Texas, they have no choice but to be a pure wires companies. I have not seen any movement to restructure in the states that have remained vertically integrated which means the market dynamic in the 50 states is defined.

Therefore we will see one sort of utility business model evolve in deregulated states and another in the more traditional states. The vertically integrated utilities dominate the relationship with their customers now with the exception of occasional load response companies and independent efficiency providers. Some of these vertically integrated utilities will take the new technology and strengthen their relationship with their customers while others will let others come in and offer non electron services. I don't understand the latter approach but see it happening.

One part of the utility business model with SG you overlooked is the ability to sell more electrons by displacing fossil sources for say space heating or transportation. Electric utilities have not been a growth business for three decades or more as electricity was tied to oil and viewed as tied to environmental harm. As smart meters and off peak pricing draws customers to slack capacity, especially carbon light capacity, there becomes a simple yet powerful wrinkle in what is today's electric business.

David O'Brien

Bridge Energy Group