Energy Firms Hope Extras Will Spark Sales
Price isn’t everything. That’s the pitch from the dozens of independent power marketers suddenly vying for your attention.
In the new free market for power, electricity service providers are competing for customers not just on price but also on services.
“Providing electricity at a lower cost than the local utility is just the price of admission to the contest, not the winning strategy,” said Michael R. Peevey, president and chief executive of Los Angeles-based New Energy Ventures, one of the big, new marketers of electricity.
Most of New Energy Ventures’ customers will pay about 5% less for their energy than they would if they stayed with their local utility, Peevey said.
But marketers say there is hidden value in the energy services they offer their customers, and Peevey pointed to his company’s contract to provide electricity and energy-management services to 45 Robinsons-May stores and distribution facilities in California as an example.
“Each Robinsons-May store gets a bill, so they’re getting 45 different bills on 22 different days,” Peevey said, explaining the old system. “The bills are bundled and shipped to the Van Nuys headquarters of Robinsons-May Southern California where one guy works full time analyzing them.”
The “one guy” is trying to figure out why one store used more electricity than another and how bills can be reduced.
“It’s a very laborious process,” Peevey said. “We’re going to be giving Robinsons-May one bill instead of 45, and they’re going to get it on the Internet.”
The company will be able to track electricity usage by store, by hour, by day, he said. It can also graph the data and pay the bill electronically.
“We’re giving them new management tools,” Peevey said.
He predicts the electricity industry will go the way of telecommunications, where customers spend more than they did five or 10 years ago--even though prices are lower--because they’re choosing to buy features that didn’t exist in the old days, like call waiting and voicemail.
Features will include meters that let customers know how much energy they’re using at any time of the day, smart-home appliances that operate when energy is cheap, tailored pricing and supply options, and even mini-power plants that can meet the electric needs of a broad range of customers.
“When you’re a monopoly, there’s little incentive to innovate,” Peevey said. “Innovation is going to happen much more rapidly in this industry because competition drives innovation.”