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Frontlines

Fortnightly Magazine - May 15 1998

legislative change.

Yet Miller says that by building unregulated business, such as energy audit companies, co-ops will get their foot in the door. "We're trying to build that relationship, that brand, so that when [deregulation] does happen in those states, [customers are] already aboard."

Miller's co-op, for instance, sells Internet services.

"If we can provide more services and more products and more branded items to our consumers, whether we actually sell them electricity (em I'm not sure that's the critical point."

So Touchstone is heating up its branding iron for when the competitive herd starts trampling customers.

That trampling (em the phone calls, crazy deals and ad clutter (em is another reason Miller says co-ops have united. Not to mention that 40 states have either enacted or are considering deregulation legislation.

"I guess we're trying to bring some sense to all this," the co-op CEO says. "That's one of the things we're trying to set with this campaign. And it's not just an advertising or a media campaign¼ We're developing a relationship brand."

"You may have seen this analogy: True Value Hardware. The local hardware store has very little clout¼ and very little buying power, but if it can get under an umbrella (em "

So Touchstone will act as a buying group?

"You want to be careful there because that may not be one of the things we get into¼"

This only gets more confusing. But suddenly, Miller offers something concrete: "If we can establish this brand as we're trying to, we've got some standards set. A co-op has to meet certain levels of performance, levels of service¼ If our partners can't meet those, they can't be partners."

But surely that occurs already. And if the relationship exists, who will it be promoted to?

"The initial thrust of our promotion is going to be commercial-industrial and opinion-maker groups," Miller says. "We feel we can get more bang for our buck there."

Maybe the toughest question is this: Does brand marketing and advertising work? This might best be answered by the orange growers (Sunkist) and cranberry growers (Ocean Spray). But will the approach work for another kind of juice entirely?

For the EnergyOnes and the Enrons, the verdict has been out for some time. Says one energy company executive: "I don't think you can really measure it yet, because in effect markets aren't open. California, quote 'opened up' April 1, but it's really not open because there are no margins open to a retailer. The ultimate test to a branding strategy will be the income stream and the net income from people who affiliate themselves with the brand."

But absorb this, just in: Enron says it will quit the residential market in California. (Only 30,000 consumers signed up for Enron's power.)

Jonathan Frenzen, management laboratories director at the University of Chicago's graduate school of business, says Touchstone has a real challenge ahead, like the fruit growers before them.

"The opportunity is to standardize and get those scale economies and advertise and create that brand image," he says. "But it's not clear what