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E-Marketing: Is Energy Missing the Net?

Fortnightly Magazine - March 15 2000

is to observe developing markets before taking any action. "We have to be very careful about trying to run the economy, especially when it comes to new technology," he says.

Hébert cites as an example the hands-off approach of the Federal Communications Commission in allowing competition to develop in telecommunications, particularly with regard to new technology. "I don't know what the call-waiting and the call-forwarding and the three-party calling of electricity is, but I know it is out there."

Internet energy companies also are concerned that regulators at all levels do not understand the Internet and the potential impacts of their actions, because changes in the Internet environment outpace its regulation.

"Regulators should consider two principles," says Vinod Dar, CEO of Energy E-Comm.com, which advises energy and utility clients about Internet strategies. "If they don't understand, then they should do no harm. They should also be asking what they can do to empower the consumer to take advantage of choice."

Hébert says regulators must maintain reliability, noting that the briefest outage can cause major problems with both hardware and software for businesses and consumers dependent on computers.

"Our role is to make sure that the utilities that are under our jurisdiction have adequate reserves to meet reliability standards and also that planned outages are not scheduled during really hot or really cold periods," he says.

Varda Lief, senior analyst with Forrester Research, suggests that the FERC appoint a technology czar.

"They don't necessarily need to take the lead, but they need to be fully informed," she says. "They need to be involved, and they need to be making decisions that have an appropriate technology basis. I don't see them doing that yet. They are making decisions about policy outside and apart from technology."

Pulling Out the Stops: Look to Other Industries

The issues that stand in the way of e-commerce reaching its true potential in energy are ones that in many cases other industries already have encountered and resolved.

Electronic Interface Standards . One thing a technology czar might do is facilitate the development of standards for electronic interface in the electric business, says Lief. The industry needs to develop a common language for extended markup language communications, or XML, between marketers and the electric companies that will deliver electricity to consumers.

"In this age of the Internet, all [electronic data interchange] should be conducted by XML," says Potter.

"The Gas Industry Standards Board has done an excellent job in designing communications standards between marketers and pipelines," says Braziel. A similar effort is needed in the electric segment. While several initiatives were started last year, no clear leader is addressing the issue.

Getman agrees that standards are needed, but remains wary of regulators.

"I think it would be a mistake for regulators to tell folks what the data transfer standards are going to be," he says.

Service Pricing. Pricing is the biggest regulatory problem for retail energy marketers like Essential.com, according to Potter.

"The regulators establish standard-offer service that is priced below market," he says. "That's the case in Massachusetts. That's the