A gas procurement incentive mechanism that provides strong incentives for a broad range of procurement-related costs and revenues, using a benchmark that is both exogenous and adaptive to external...
NEV?s Mike Peevey: Meters Make the Market
not being responsive to getting this going at an early date.
How does metering fit in with your corporate strategy? What is the value proposition that you see for your customers?
There's two pieces to it. We sell to customers who are members of what we call our buyer's alliance. We think we have the biggest customer base in California. Now PG&E Energy Services may dispute that (em I don't think Enron would (em but clearly we are one of the dominant players here in California. Everyone else has got a niche here and there.
We feel we can beat the PX price and save you money on the commodity. But also, customers find it very attractive that we provide information services and management tools that they heretofore have not had.
For example, we provide energy management services for commercial customers with multi-location facilities. Historically, with few exceptions, utilities have sent each store a bill, depending on the day of the month that they do their billing, which is done on a zip code basis. So for Ralphs grocery chain, which has 300-plus stores, or anybody that has multiple outlets, they get all these bills at different times of the month. The bills are then assembled and are sent off to some central place where the company analyzes them and then they're paid. OK?
But forget all that. In the future (em and we're doing the billing here in California (em we're sending one bill, to one location, once a month, and it will have all the backup data by store so that each store manager can drill down as deeply as possible about their own usage and the overall energy manager for the company can look and compare outlets, facility by facility. This is a great management tool. And they can look it all up on their PC. And they can compare Outlet A with Outlet B with Outlet C. So they have similar footprints, with the same climatic zone. If one is using $50,000 more electricity than another in a month, then the question is, "Why?" And they can get an instant answer.
That has not been available in a central way before. It's a significant and sophisticated advance and a new management tool. We're able to do it because we're starting out as a company. We went out and got the best technology possible and off we went. And this is a product that we developed with LG&E, with Schlumberger and with MCI.
Is there intelligence to the meters that you've installed?
Well yes, these are smart meters. They read every hour. Hell, they can read every minute if they have to. They have to read every hour because the PX price changes every hour (em and it will. They send a usage signal to a central server and then it's all pulled together. But my point is that we're providing service that's independent of commodity savings and also an enhancement to customer relationship.
Some of the members of your buyer's alliance are big players. Do you allow them