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Marketing & Competing

Fortnightly Magazine - June 1 1995

its vision won't be known for years. But with the industry spread so thin, the odds of success are not all that much longer against a modest-sized firm such as UtiliCorp than they would be for any of the nation's larger utility companies. (Note how UtiliCorp's market share of energy sales compares with that of several larger energy utilities in the accompanying table.)

UtiliCorp marketing vice president Bill Burgess, who held senior marketing posts in three previously deregulated industries (em airlines, banking, and telecommunications (em acknowledges that the company may not be able to rely purely on market forces as they try to grow EnergyOne. The transition to a competitive market in electric power is likely to be far more complicated than natural gas or even telecommunications.

For example, while UtiliCorp's power marketing affiliate (em Aquila Power (em at press time had received approval from the Federal Energy Regulatory Commission (FERC) to broker electric sales, UtiliCorp's retail electric utility still needed approval for a comparable transmission tariff from the FERC. (Aquila Power is not interconnected with UtiliCorp.)

Even when UtiliCorp receives its transmission tariff, it remains to be seen how soon certain states will permit UtiliCorp to compete for electric retail business. The unwillingness of states such as Florida, Missouri, and Virginia to foster competition (em and to lift utility earning caps (em already is slowing down the industry's ability to identify and serve customer needs.

These types of regulatory hurdles will require UtiliCorp and others to keep one eye peeled on state commissions and strategic acquisitions while spreading risks over a diverse asset base. But that distraction probably won't keep Burgess from identifying specific segments of the market in particular states or regions where he feels the company can compete on price and enhance service compared to existing providers. In that sense, UtiliCorp is declaring war on all local utilities, beginning with California and selected states in the Midwest.

How Might EnergyOne

Make a Difference?

Attempting to add intangible value to commodities is fraught with risk. UtiliCorp might be spending much of its upfront investment in advertising, marketing materials, and publicity not on EnergyOne, but to educate businesses and households about choices many of them may not have for a long time. Electric power deregulation is progressing, but in fits and starts. If the green light ever enables unfettered competition, users may not be inclined to seek out EnergyOne after the market has had time to respond.

For a brand that can distinguish itself, however, the potential payoff of such an investment could be significant. UtiliCorp and its advertising agency, Muller + Company, faced no national competition on this level as they prepared for the rollout. While many energy providers (such as Brooklyn Union Gas and PacifiCorp) are attempting to position themselves as the premier energy provider in their regions, and Consolidated Natural Gas is pitching itself as a "one-stop" energy shop, UtiliCorp may be seizing the most efficient opportunity to sell itself to the nation as a whole. And as the scramble for customers heats up, EnergyOne might enable UtiliCorp