Market Competitive Intensity (MCI):} Pennsylvania

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: Despite having open gas and power markets, Pennsylvania's score is curtailed by consumer switching apathy 7
Despite being towards the upper end of the scale, Pennsylvania's power score shows only marginal development over the forecast period 7
In common with its power score, the gas score shows only limited development in the period to 2010 8
Power MCI: Pennsylvania's overall power score is supported by strong Market Framework and Supplier Push factors 9
All of the Market Framework factors remain at the top end of the scoring scale 9
Effectiveness of Regulator (2008: 8/10, 2010: 9/10) 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
Concentration in the wholesale and retail markets leads to a mid-range score on the Supplier Push metrics 10
Wholesale Market Fragmentation (2008: 5/10, 2010: 5/10) 10
Retail Market Fragmentation (2008: 5/10, 2010: 6/10) 11
Traded Market Maturity (2008: 10/10, 2010: 10/10) 11
A weak Propensity to Switch score curtails the Customer Pull metrics 11
Access to Market Information and Assistance (2008: 8/10, 2010: 10/10) 11
Consumer Representation (2008: 6/10, 2010: 8/10) 11
Propensity to Switch (2008: 1/10, 2010: 2/10) 11
Gas MCI: The deregulated nature of the market and a strong regulatory framework drive the gas market score 13
All of the Market Framework factors score at, or close to, the upper end of the scoring scale 13
Effectiveness of Regulator (2008: 8/10, 2010: 9/10) 13
Ease of Third Party Access (2008: 10/10, 2010: 10/10) 14
Effectiveness of Balancing and Data Transfer (2008: 4/10, 2010: 5/10) 14
A relatively concentrated retail market curtails the Supplier Push metric 14
Wholesale Market Fragmentation (2008: 8/10, 2010: 8/10) 14
Retail Market Fragmentation (2008: 4.5/10, 2010: 5/10) 14
Traded Market Maturity (2008: 7/10, 2010: 8/10) 14
Low switching activity indicates weak Customer Pull metrics 15
Access to Market Information and Assistance (2008: 8/10, 2010: 9/10) 15
Consumer Representation (2008: 4/10, 2010: 5/10) 15
Propensity to Switch (2008: 1.5/10, 2010: 1.5/10) 15
Outlook: Both the gas and power markets in Pennsylvania show only marginal improvements in competitive intensity over the forecast period 16
MCI Scores 17
APPENDIX 19
Definitions 19
Ask the analyst 24
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Table 1: Market Competitive Intensity, Pennsylvania 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, Pennsylvania 9
Figure 9: Gas Market Competitive Intensity, Pennsylvania 13
Figure 10: Market Competitive Intensity, Pennsylvania 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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