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There are sound economic reasons why policymakers should allow electric...
Imagine you're the principal energy buyer for a national chain of managed health care centers, with a $200-million annual energy tab. Top management asks you to assess how the chain can cut its energy bills.
You turn to your local electric and gas utility, which talks a lot about customer service, but doesn't have much to show for it yet. And on the two recent occasions when a utility representative did visit your office, you came away with more questions that answers about how to cut costs or manage your energy diet. But you've done your homework.
With the passage of the Energy Policy Act of 1992, you've recognized the profound changes occurring in the way electricity is going to be distributed, and the growing speculation about how energy is going to be marketed. You realize that at some point in the near future, the best energy supply might not come from your local utility.
Instead, might it make sense to link up with one such energy supplier for all of your care centers in major markets throughout the country? Could such a company succeed in giving you the enhanced service you want and become your energy consultant of sorts? Or can you extract lower prices from individual local utilities and obtain the energy services you would still need from vendors?
Now imagine you are the marketing chief of a electric and gas utility. You want to hold onto that piece of business because one of those managed care centers is located right in the middle of your service territory. You'd also like a shot at winning more of the chain's business if you could piece together the necessary expertise and gain pipeline and transmission line access to supply the product.
How to Add Intangible Value
Here's the question: Would creating a package
of fuels and energy services, with a single brand identity distinct from a company's name, help you market your firm's capabilities and create some intangible value for stockholders? How might you do
it anytime soon in such a fragmented industry?
If there is a reasonable prospect of creating new value, how does a company with no more than, say, a 0.5-percent share of the national "market" for energy, on a BTU basis, position itself as a leader of branded energy throughout a region or, perhaps, across the nation? How does a company market electricity and/or natural gas that it cannot yet deliver to the end user?
Does the increasing commoditization of the electricity and natural gas businesses undermine such a strategy? And do you stand a chance if you're not the lowest provider wherever you compete?
We're beginning to find out how at least one utility company is trying to answer these challenges. Kansas City, MO-based UtiliCorp/United is going about it with a nationwide rollout this summer of its EnergyOne package of electricity, natural gas, and energy services. It is striving, in the words of chairman and CEO Rick Green, to become "America's Utility," with hundreds of potential energy packages tailored to clusters of marketing prospects.
Whether UtiliCorp achieves