Public Utilities Reports

PUR Guide 2012 Fully Updated Version

Available NOW!
PUR Guide

This comprehensive self-study certification course is designed to teach the novice or pro everything they need to understand and succeed in every phase of the public utilities business.

Order Now

Load Aggregation: The Wolf at the Door?

Fortnightly Magazine - January 1 1997

just signed up First Union's 2,000 branches)

• Real estate management firms (NEV started with the Los Angeles Building Owner's and Manager's Association as its commercial base).

Aggregators will either serve these targets directly, or they will "sell" them to larger organizations, which will serve these customers as part of an even larger group. In effect, just as electricity turns into a commodity, so do the customers.

Likely Alliances

While power marketers and aggregators may compete for some loads, they will often wind up working together to gather and serve large aggregated loads.

By acting jointly, marketers and aggregators can conserve administrative resources and control the power path from "boiler to busbar." Also, power marketers may need an aggregator to act as a sales and service force when dealing with small and residential customers. Power marketers are presently focused on serving wholesale customers, while load aggregators can tailor and deliver their groups as a new form of wholesale client.

Meanwhile several utility spin-offs that began as power marketers are gradually turning into aggregators, or vice versa. Here are some examples:

• LG&E Power Marketing, a spin-off from of Louisville Gas & Electric Co., is exploring opportunities to form partnerships with aggregators.

• Brooklyn Union has created KeySpan Corporation to secure gas (and eventually electric loads) from neighboring utilities.

• EUA Cogenex, the energy services (ESCO) division of Eastern Utilities Associates, recently announced a partnership with Duke/Louis Dreyfus to begin power marketing and aggregating in the New England area.

Utilities trying to play catch-up may find it becoming increasingly difficult, due to downsizing pressures, regulatory demands, and staff limitations. Just as many utilities entered the demand-side management market by acquiring or spinning off ESCOs, they might adopt a similar strategy to crack the aggregator market, not only to retain native load, but also as a way to secure the loads of other utilities.

What Customers Want: Service

Surveys, focus groups, and one-on-one discussions indicate that customers are looking for more than just a lower price from a new service provider. Fertile territory remains to be explored in satisfying a host of customer needs, such as:

• Consolidated billing and analytical services

• Power quality and environmental compliance

• Outsourcing energy plant operations

• Energy purchasing

(customer-owned natural gas, rate analysis, etc.)

• Managing and funding energy efficiency projects.

Most of these services are available piecemeal, from a variety of vendors, such as National Utility Services, Standard Rate Review, and hundreds of other "consultants" operating out of their kitchens. Many are presently acting as ESCO's, electrical contractors, gas marketers, building management agencies, or engineering consulting firms.

Nevertheless, these same surveys and studies that identify opportunities for new services also show that most customers want to deal with one provider (preferably their present energy company, rather than a host of different vendors of varying abilities and performance. UtiliCorp's Energy One offered the first store for "one-stop shopping," but it won't be the last. Many utilities already have projects underway to employ unregulated ESCO's to consolidate analytical, engineering, and financial assistance for large customers.

Less than 4 percent of buildings are overseen by some form