Market Competitive Intensity (MCI): Maryland

This series of market profiles covers 5 key markets in North America. Each profile provides insight into market structures, regulatory environments, supply and demand balances, assets, market concentration and wholesale sources of energy.

Report Highlights
Each profile offers a supply and demand balance showing a breakdown of both supply sources and consumption by end use sector.

Subsequent analysis provides a deeper analysis of supply and demand dynamics by looking at factors such as indigenous production trends, trade flows and current and historical sectoral demand trends.

The profiles also include a detailed analysis of each market's regulatory structure. This provides an examination of key governmental, legal and political influences on the energy sector. Each profile also contains an overview of energy assets and infrastructure at various stages of the value chain.
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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 North American 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 6
A simple weighted average (additive) measure shows overall competitive intensity 6
A weighted multiple (multiplicative) measure shows overall competitive intensity 6
The MCI framework has a number of applications for energy market players 6
Context: Marylands gas and electricity markets lacks effective customer pull characteristic, which is an important indicator of any developed energy market. 7
Robust market framework and supplier push have had minimal impact on the retail side competition end of value chain. 7
Import dependent gas market in Maryland provides opportunity for new entrant at the retail side. 8
Power MCI: Robust market framework and supplier push have had minimal impact on the retail side competition end of value chain. 9
As an integral part of PJM network, Maryland reflects a robust market framework with defined TPA and effective balancing mechanism in place. 9
Effectiveness of Regulator (2008: 7/10, 2010: 8/10) 9
Ease of Third Party Access (2008: 10/10, 2010: 10/10) 10
Effectiveness of Balancing and Data Transfer (2008: 10/10, 2010: 10/10) 10
High level of concentration in wholesale and retail market pulls down the score while robust trading market reduces the concentration impact on supplier push 10
Wholesale Market Fragmentation (2008: 4.5/10, 2010: 5/10) 10
Retail Market Fragmentation (2008: 4.5/10, 2010: 6/10) 11
Traded Market Maturity (2008: 10/10, 2010: 10/10) 11
Lower switching activity indicates weak customer pull, though the consumer representation and information availability remains strong 12
Access to Market Information and Assistance (2008: 8/10, 2010: 10/10) 12
Consumer Representation (2008: 6/10, 2010: 8/10) 12
Propensity to Switch (2008: 1/10, 2010: 2/10) 12
Gas MCI: Import dependent gas market in Maryland provides opportunity for new entrant at the retail side 13
Maryland gas market has a robust market framework but import dependence drags the overall score. 13
Effectiveness of Regulator (2008: 7/10, 2010: 8/10) 13
Ease of Third Party Access (2008: 10/10, 2010: 10/10) 14
Effectiveness of Balancing and Data Transfer (2008: 1/10, 2010: 1/10) 14
Direct dependence on import leads to a weaker supply side push 14
Wholesale Market Fragmentation (2008: 0.5/10, 2010: 0.5/10) 14
Retail Market Fragmentation (2008: 4.5/10, 2010: 6/10) 15
Traded Market Maturity (2008: 0/10, 2010: 0/10) 15
Weak customers pull on account of marginal switching. 15
Access to Market Information and Assistance (2008: 8/10, 2010: 9/10) 15
Consumer Representation (2008: 6/10, 2010: 8/10) 15
Propensity to Switch (2008: 1.75/10, 2010: 2/10) 15
Outlook: Maryland Power and Gas market shows improvement in forecasted period 16
MCI Scores 17
APPENDIX 19
Definitions 19
Ask the analyst 24
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Table 1: Market Competitive Intensity, Maryland 2008-10 17
Table 2: MCI Additive, North America 2008-2010 17
Table 3: MCI Multiplicative, North America 2008-2010 1
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: North America Power Market Competitive Intensity, 2008-10 7
Figure 7: North America Gas Market Competitive Intensity, 2008-10 8
Figure 8: Power Market Competitive Intensity Index, Maryland 9
Figure 9: Gas Market Competitive Intensity, Maryland 13
Figure 10: Market Competitive Intensity, Maryland 16
Figure 11: Scale for MCI Assessment, Effectiveness of Regulator 19
Figure 12: Scale for MCI Assessment, Ease of Third Party Access 20
Figure 13: Scale for MCI Assessment, Effectiveness of Balancing and Data Transfer 20
Figure 14: Scale for MCI Assessment, Wholesale Market Fragmentation 21
Figure 15: Scale for MCI Assessment, Retail Market Fragmentation 21
Figure 16: Scale for MCI Assessment, Traded Market Maturity 22
Figure 17: Scale for MCI Assessment, Access to Market Information and Assistance 22
Figure 18: Scale for MCI Assessment, Consumer Representation 23
Figure 19: Scale for MCI Assessment, Propensity to Switch 23
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