Washington (Platts)--6Feb2009

A sharp reduction in US power prices that was tied to lower fuel costs
"should put to rest the shallow arguments suggesting that competitive markets
aren't working because electricity prices increase," the Compete Coalition
said Wednesday.

Compete, which represents customers, suppliers, generators and others,
pointed to recent reports of falling power prices in organized markets around
the country: a 54% drop in New York Independent System Operator's footprint
since June, a 28% drop in Electric Reliability Council of Texas since July and
price cuts from 10% to 14.6% for customers in parts of ISO-New England and PJM
Interconnection.

"The thing about markets is that prices go up and prices go down, and the
prices are tied in large part to the cost of generation fuel," William Massey,
counsel to Compete, said Thursday. "I suppose the opponents of markets just
thought that prices would go up and stay up regardless of the cost of fuel,
but it doesn't work that way."

Impacts of fuel costs are felt in regulated areas as well but are
averaged in over time, Massey said. "So you see fuel cost differences in
competitive markets much, much quicker." That provides a clear price signal
"customers can react to...in real time," he continued.

Moreover, the prices "reflect competition among suppliers and, I think,
pave the way for all of the good structural changes that the new
administration and Congress would like to make with respect to increased
renewables, smart grid and even a market-based cap-and-trade system" for
carbon reduction, Massey said.