(January 2006) Kathleen Chagnon joined Saul Ewing LLP as a partner in its business department. Sierra Pacific Resources announced that Donald D. Snyder was elected to...
Advertising & Branding: Are Utilities Getting It Right?
of a shock [to] executives who have worked in a regulated environment where the only advertising you had to do was a little bit of member services, and some good will advertising, to suddenly realize you have to do a lot of marketing advertising. We've had to go back and redo our budgets a couple of times during the year as events unfolded."
But the fight with Enron continued to take center stage.
One PECO ad featured actor David Leisure, who made his mark in the mid-1980s as "Joe Isuzu," a salesman willing to say anything. There's no direct mention of Enron, but the message was clear: "I think we'll see a lot more of this type of advertising - we have to use the same marketing techniques that consumer marketing companies use," says Hackney. Feel-good ads will continue, he adds, but others will be the "hard-knuckle, competitive marketing."
Last fall the members of the Pennsylvania Electric Competition Coalition - Conectiv Energy, New Energy Ventures and Enron - distributed a marketing piece entitled, "Restructuring PECO Energy for Customer Choice & Competition: A Briefing for Greater Philadelphia," to public officials, business leaders and media organizations. According to Enron's Gary Foster, that particular campaign "was geared to five people that are on the PUC," and the primary goal was "to win political support and overall support for our Choice Plan versus the PECO plan."
The booklet, which discussed PECO's above-average energy rates and the "flaws" of PECO's restructuring plan, introduces the coalition this way: "As PECO's would-be competitors, we have no vast pool of monopoly resources with which to match PECO's media campaign. The most we can look forward to is to compete fairly for your business."
Hackney, who says it would be "problematic" to talk about specific advertising and marketing costs, does say that "the numbers have probably gone up in the range of 400 to 500 percent. We're in a little bit of a different situation than some other companies, but I don't think we're that different from what other companies are going to face."
Also, Hackney says, although a utility company's increased cost of advertising "does absolutely nothing to the rates, this is one of the most confusing and potentially controversial parts of this whole transition."
When asked if the coalition's ads were misleading - that it faced a financial disadvantage - Foster responded, "No, it is not misleading, because when we advertise and we spend money on advertising, that is coming out of our shareholders' pockets. We have no trapped monopoly customer base like the utilities do. [Our] shareholders can exercise their rights by not agreeing with Enron's strategy by selling their stock and going someplace else. A customer in a monopoly service territory has no other choice."
Foster adds, "While Enron is large and we do have resources, we're fighting this battle on multiple fronts all across the country while at the same time advertising to become well known. Whereas the PECOs of the world, or Pacific Gas & Electric, they've been around for almost a hundred years, and