Energy Service Marketing: ESM Supplants DSM

Fortnightly Magazine - July 1 1995
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The nonstop dialogue about retail wheeling, power brokers, PoolCos, and restructuring overlooks customers and their increasing thirst for value-added services. Aside from a few emphatic words by some industrial users, little has been said about customer expectations. This article offers a snapshot of the brave new world of energy service marketing (ESM). ESM will take the place of demand-side management (DSM) and electricity marketing, blending the best of both.

ESM is simple. In contrast to DSM and its highly complex agenda, ESM seeks only to deliver value to customers. The industry has never decided whether DSM is a customer service, supply-side substitute, or environmental crusade. But ESM clearly offers products and services that customers want and need (em pricing options and contracts, information services, end-use services (actually selling lighting, heating, cooling, drive power, and so on), operation and maintenance, and financing for energy equipment investments, among others.

Utilities that wish to compete only in the electricity commodity business will find their margins shaved to a bare minimum. Survivors will search for broader geographical markets. The ESM arena offers many opportunities for higher profit margins.

Electric utilities have always revered the large industrial customer. But those customers just want a low price. And their market clout will only grow under under competition. On the other hand, most nonindustrial customers have a different focus. They represent a prime market for ESM. These customers must concentrate intently on their market and usually lack the time or interest to tackle energy options. Yet they can be highly receptive to assistance in lowering operating costs, improving comfort, meeting environmental rules, and simplifying their everyday lives.

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