Detroit Edison Co. (DE) has received approval from the Michigan Public Service Commission for
10-year sole-supplier contracts for electric power and related services with Chrysler, Ford,...
case in Rhode Island. That is true in almost every state."
Enrollment Concerns . "In order for a customer to switch a supplier, the customer must give us or any other supplier their account number, and it has to be accurate," Potter says.
In the long-distance business, the account number is the telephone number, and everyone knows their telephone number. Not only are consumers less familiar with their account numbers for electric and gas service, the numbers may be as long as 20 digits. Typos are common.
"That one fairly simple issue has a negative impact on customer conversion in the retail space," he says.
Contracting issues can be problematical for both retailers and exchanges. Some states require a wet signature, so although business can be conducted online, off-line paperwork remains necessary. House Commerce Committee Chairman Tom Bliley (R-Va.) has introduced legislation that would standardize the use of electronic signatures by giving them the same legal recognition as a paper signature. States would still be free to address other contract issues.
Security Issues. Cyber-crime became front-page news in February when hackers attacked major websites, shutting them down for prolonged periods and cheating them out of business. The events prompted federal law enforcement agencies to call for a coordinated strategy against Web crime and tougher penalties for perpetrators. The problem is a serious threat to national and economic security in the United States, according to the FBI.
Nevertheless, some Web companies say security shouldn't concern customers.
"Within the infrastructure of the Internet, security tools are available to deploy whatever standard of security a customer wants," says Braziel.
That consummating the transaction and scheduling the transaction are separate steps in the existing spot markets for gas and electricity provides additional protection. "We believe it is highly unlikely that power could be moved inadvertently."
Privacy is a related matter. In online energy trading, buyers and sellers generally are not aware of each other's identities until after the transaction has been consummated, if at all. "Companies that are doing business on our system have signed a comprehensive contract stating exactly what our restrictions and constraints on using data are and that they understand precisely how we will use the information," Braziel says.
Although one might expect security and privacy to be more of a concern with residential and small-business customers, Potter says that is not the case.
"Our target market is the Web-enabled consumer. Most people that shop online don't have too many issues with securing information," he says. "We have a secure website. Information is not shared between suppliers. It shouldn't be an issue."
Is Energy a Victim of its Own Prudence?
Companies like Altra, HoustonStreet and Essential.com are demonstrating that the Internet can be an effective tool for energy marketing at the wholesale and retail levels. Many utility companies, however, are failing to take advantage of that opportunity, say critics.
Energy E-Comm.com recently evaluated the websites of 100 companies in the energy and utility business and found most of them lacking. The evaluation criteria included an analysis of the use of Internet capabilities and