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Off Peak

Fortnightly Magazine - May 15 1998

WHEN EXECUTIVES IN CHARGE OF ENERGY purchases for national, multi-site companies say, "Simplify my life," they mean it.

These executives are doing business nationwide with an average of 60 electricity suppliers. This figure will drop more than 80 percent to 11 suppliers once electric competition gets underway, according to RKS Research & Consulting's 1997 National Account Survey.

RKS Vice President Carmine Grastataro directed the study and oversaw focus groups of vice presidents of construction, energy management, retailer, health care and property management companies. The participants discussed how they will exercise their new-found choice of electric suppliers. Most agreed they wanted the entire process simplified.

A simpler process for a national restaurant chain, for example, would include a single contact with an energy provider, a system for real-time pricing and a single bill of all costs and services. Price proved a secondary consideration. Grastataro said that first, companies wanted their energy provider to offer basic services; second, they wanted a good price.

Surprisingly, a simpler process doesn't mean bundling telecommunications and energy services together; only 9 percent of energy managers surveyed favored purchasing both services from the same supplier. However, almost two-thirds of the managers support the idea of combining electric, gas, water, sewage and trash statements into one monthly bill. Residential customers also liked the idea of receiving a single monthly bill for gas, water, sewer, trash and electricity.

A survey by energy consultant firm Datamonitor found that by the end of 1997, 59 percent of commercial and industrial customers had begun to look for a new energy supplier. Some of the largest energy users reported that they had been contacted by up to 50 competing suppliers. Nearly half of all respondents said the need to have a joint electricity and gas supplier would have an impact on their decision.

RKS found most electric customers expected to save 14 to 20 percent on their energy bills under competition.

National Companies Sign Deals

ADVANTICA RESTAURANT GROUP: Houston Industries Major Accounts Group (electricity, natural gas and energy services for more than 500 California restaurants, including Coco's, Denny's and El Pollo Loco).

BLOCKBUSTER VIDEOS INC.: PG&E Energy Services (electricity supply to 530 non-franchised Blockbuster Video and Blockbuster Music stores in California in traditional investor-owned utilities' territory).

MCDONALD'S CORP.: PG&E Energy Services (power for over 800 corporate office and franchised restaurants throughout California).

SAKS FIFTH AVENUE: New Energy Ventures (energy procurement nationwide, as states open to competition; daily usage and demand data on a per-store basis via the Internet).

SUPERAMERICA/VALVOLINE STORES: Avista Advantage (resource accounting and consolidated billing for electric, gas, sewer and water, primarily for stores in the East and Midwest).

ORMET CORP.: CNG Energy Services (a comprehensive natural gas management deal for eight facilities in seven states, effective Jan. 1, 1998, follows last year's electricity management and supply agreement for a smelter and a mill in Ohio that will take effect Jan. 1, 2000).

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