Citizen Power cautious, upbeat about RBS electricity bid
Saturday, January 24, 2009
By Elwin Green, Pittsburgh Post-Gazette

News that the Royal Bank of Scotland has applied with the state Public Utility Commission to sell electricity in Pennsylvania was greeted with cautious optimism by David Hughes, the executive director of Citizen Power, an advocacy group focusing on the impact of deregulation on the environment and on low-income consumers.

"I'm happy to see that there's possibly going to be another choice for customers, but I would hope that RBS would be selling clean energy," he said.

He said he considered it likely that the troubled corporate parent of Citizens Bank is not planning to build generation facilities, but that it wants to enter the market for renewable energy credits, financial instruments developed as incentives for electricity generators to pollute less.

PUC spokeswoman Jennifer Kocher said the bank's application was a first for the agency.

"Having a bank or a financial institution become an electric generation supplier or an electric marketer is something that we've not seen before in Pennsylvania," she said.

However, she added, "We have seen more and more financial institutions becoming involved in utilities in the state," citing the purchase of Duquesne Light by a consortium led by Australia's Macquarie Bank.

"You don't have to be a generator of electricity in Pennsylvania to be an electricity generation supplier," Ms. Kocher said. "You can be more of a marketer. You just have to have the resources to be able to acquire that generation."

If the application is approved, the bank will enter Pennsylvania's electricity market by way of a joint venture with Sempra Commodities, a subsidiary of San Diego-based Sempra Energy. Sempra Energy Solutions is already an electricity supplier in eight other states: California, Connecticut, Maine, Massachusetts, Michigan, Ohio, Oregon and Texas. Ms. Kocher said the bank's application indicated that it had applications pending in Maryland, New Jersey, New York and Rhode Island. All of the states in which RBS either sells electricity or is applying to do so have deregulated their electricity markets.

Besides the question of what sources RBS would draw on for the electricity it sells, there is the question of whether the financial condition of the bank, which announced Monday that its losses for last year could reach 28 billion pounds ($41.3 billion), could jeopardize any service that it might sell.

Not to worry, said Ms. Kocher. In a worst-case scenario, if an electricity supplier is not able to provide service, its customers are switched over to receive service from their local electric utility.

The PUC has extended the 45-day review period for the application.

Elwin Green can be reached at egreen@post-gazette.com or 412-263-1969.