In the information age, big growth doesn’t come from putting steel in the ground; it comes from innovating and creating value. But if electricity customers care only about reliability and price,...
Why utilities haven't scored at e-commerce.
From what I hear, utilities would love to junk their call centers, whether or not they run them in-house. Call centers had their moment in the sun, but today the Internet makes them look feeble. Why hire a minimum-wage sales staff to take orders by phone when consumers will gladly input their own bids at the click of a mouse? You can't trim transaction costs any closer than that.
On the other hand, if a customer's revenue potential is large enough to warrant voice contact, then you're probably better off meeting the customer face to face. A call center is just smart enough to cost money and just slow enough miss out on dramatic cost savings. And good luck if your call center staff is union labor. Then you're really stuck.
Let's admit it. Utilities are floundering in the world of e-commerce.
I even hear warnings that upstart companies formed only within the last few years might launch hostile takeovers of century-old utilities. That fear isn't so far-fetched. Dot.com upstarts, built from the ground up for the online world, appear poised to take over. Wayne Gretsky said he skated to where the puck would be, but if he had played e-hockey against utilities, he would have likened it to shooting at an empty net.
IN FEBRUARY, AT HIS WORKSHOP ON E-COMMERCE , energy consultant Vinod Dar (the engaging maverick who split from PHB Hagler Bailly last year to form his own firm called Energy E-Comm.com), warned his audience how far utilities have fallen behind the typical e-business in terms of equity market capitalization, and how easily they may fall prey to takeovers from dot.coms flush with cash that know how to sell online and that aren't burdened by a century or more of energy experience that now may be of dubious value.
According to Dar's figures (at then-current prices), companies like America Online ($130 billion) and Yahoo ($82 billion) dwarf even the largest of energy delivery conglomerates, including Enron ($43 billion), Duke Energy ($20.8 billion), Southern Co. ($20.8 billion), and Edison International ($17 billion). Second-tier dot-coms like Amazon ($21 billion), eBay ($19 billion) and Lycos ($7.6 billion) are not far behind.
Dar's firm has been circulating for comment a draft petition that would ask the Federal Energy Regulatory Commission to open a rulemaking on the effect of e-commerce on the utility industry, and warns that the "heavy pipes and copper wires that embody 19th-century science and technology" now appear vulnerable.
Dar sees utilities retreating into a box, hibernating in an ever-smaller regulatory enclave. They would limit their activities to back-office functions like power transmission and natural gas transportation. Yet Dar believes that supremacy lies in cultivating and perfecting customer contact - where the Internet will hold sway, and where the likely winners (and takeover artists) will come not from within the utility industry, but from without.
What are the chances that a utility company will ever design a website as fun and useful as Amazon.com? And what prevents Amazon from selling electricity and gas to go