Market Competitive Intensity (MCI): Texas

Table of Contents

DATAMONITOR VIEW 1
CATALYST 1
SUMMARY 1
ANALYSIS 2
Introduction: Datamonitor' s MCI Index offers a robust framework for measuring the development of energy Market Competitive Intensity 2
The MCI Index shows how attractive a particular market is to new entrants in terms of the competitive environment 3
The MCI assessment draws on nine underlying metrics grouped into three broad clusters: Market framework; Supplier Push; Customer Pull. 3
The MCI Index measures the development of 5 US gas and power markets 4
The MCI Index assesses markets in July 2008 and on 1st July 2010 4
Each of the nine pillars has an assessment scale to allow for the comparison of diverse markets (see appendix for more details) 5
Two different methods of overall score calculation are used to ensure full clarity of results 5
A simple weighted average (additive) measure shows overall competitive intensity 5
A weighted multiple (multiplicative) measure shows overall competitive intensity 5
The MCI framework has a number of applications for energy market players 6
Context: Texas power and gas market ranks ahead of other NA markets covered 7
The Texas power market ranks top of other markets covered 7
Texas gas score remains unchanged during the forecast period 8
Power MCI: Texas power score is affected slightly by average Supplier Push score 9
All the Market Framework lie in upper half of metrics 9
Effectiveness of Regulator (2008 -8.5/10, 2010 - 9/10) 9
Ease of Third Party Access (2008-8.5/10, 2010 - 8.5/10) 10
Effectiveness of Balancing and Data Transfer (2008- 7/10, 2010 - 8/10) 10
Traded market maturity is likely to improve over the forecasted period 10
Wholesale Market Fragmentation (2008 - 8/10, 2010 -8.5/10) 10
Retail Market Fragmentation (2008 - 8/10, 2010 - 8.5/10) 10
Traded Market Maturity (2008 -6.5/10, 2010 - 7/10) 11
High switching rate pushes the overall Customer Pull score 11
Access to Market Information and Assistance (2008- 6/10, 2010- 6.5/10) 11
Consumer Representation (2008- 5.5/10, 2010- 5.5/10) 11
Propensity to Switch (2008- 8/10, 2010- 8.5/10) 11
Gas MCI: Texas gets a low Customer Pull score vis-à-vis other metrics score 12
Market framework score likely to remain unchanged 12
Effectiveness of Regulator (2008 - 8/10, 2010 - 8.5/10) 12
Ease of Third Party Access (2008- 9/10, 2010 - 9/10) 13
Effectiveness of Balancing and Data Transfer (2008- 9/10, 2010 - 9/10) 13
Competitive wholesale and retail markets increases the the overall supply score 13
Wholesale Market Fragmentation (2008 -10/10, 2010 - 10/10) 13
Retail Market Fragmentation (2008 - 8/10, 2010 - 8.5/10) 13
Traded Market Maturity (2008 - 8.5 2010 - 9/10) 13
No active customer choice program deters switching in the residential gas market 14
Access to Market Information and Assistance (2008- 7/10, 2010- 8/10) 14
Consumer Representation (2008- 5/10, 2010- 5.5/10) 14
Propensity to Switch (2008- 0/10, 2010- 0/10) 14
Outlook: Both, power and gas market provide plenty of opportunity for competition 15
MCI Scores 16
APPENDIX 18
Definitions 18
Ask the analyst 23

List of Tables
Table 1: Market Competitive Intensity, Texas 2008-10 16
Table 2: MCI Additive, US 2008-2010 16
Table 3: MCI Multiplicative, US 2008-2010 17

List of Figures
Figure 1: MCI Assessment Scale 3
Figure 2: MCI Assessment Framework 3
Figure 3: MCI Market Coverage 4
Figure 4: MCI Scales 5
Figure 5: MCI Applications 6
Figure 6: Asia Pacific Power Market Competitive Intensity, 2008-10 7
Figure 7: Asia-Pacific Gas Market Competitive Intensity, 2008-10 8
Figure 8: Power Market Competitive Intensity Index, Texas 9
Figure 9: Gas Market Competitive Intensity, Texas 12
Figure 10: Market Competitive Intensity, Texas 15
Figure 11: Scale for MCI Assessment, Effectiveness of Regulator 18
Figure 12: Scale for MCI Assessment, Ease of Third Party Access 19
Figure 13: Scale for MCI Assessment, Effectiveness of Balancing and Data Transfer 19
Figure 14: Scale for MCI Assessment, Wholesale Market Fragmentation 20
Figure 15: Scale for MCI Assessment, Retail Market Fragmentation 20
Figure 16: Scale for MCI Assessment, Traded Market Maturity 21
Figure 17: Scale for MCI Assessment, Access to Market Information and Assistance 21
Figure 18: Scale for MCI Assessment, Consumer Representation 22
Figure 19: Scale for MCI Assessment, Propensity to Switch 22