[BETA] Fortnightly

As energy suppliers gather more detail about customers, opportunities for segmenting and selling them will increase during the next five years.

As technology such as AMR and improved information-gathering systems enhance customer data, energy service providers will be well-positioned to segment load profiles into valuable blocks for sale. According to PHB Hagler Bailly's "Energy Industry Outlook 2000," this bottom-line-enhancing possibility will contribute to the changing customer-energy supplier relationship during the next five years.

"If you make the assumption that there will be big blocks of customers who are likely to stay with the incumbent company, then those become a very nice package or bundle to buy, sell, do things with," explains Dr. Roger Gale, president and CEO of PHB Hagler Bailly.

Whether or not customers switch energy suppliers, Gale says, the way they interact with the ESP will certainly change as AMR, bill payment via the Internet and other changes are implemented.

"Put all that together and you have an extraordinarily different world," says Gale. "That's where I think the customer relationship will change. ¼ That's the only relationship the customer has with the utility, pretty much, is writing the check, or calling when the lights go out. That relationship won't be there."

Some ESPs may choose to sell blocks of customers to other energy suppliers. Gale says that's already being attempted. Customers continue to pay their bills to the same ESP they had previously, but another energy company generates the electricity.

"[The first ESP maintains] the risk of providing the service - the wires have to still be there - but they've passed on the energy commodity risk to somebody else," he explains.

So which ESPs stand to benefit most from such an arrangement?

"That depends on who calculates best, like everything else," says Gale. "If you take on that responsibility and you price it wrong, you're dead. If the utility that gets rid of the responsibility realizes there's no way they could ever price it right and make money, then they're the winner."

New England Electric System has seen varying success with two programs it developed to sell customer data to other ESPs while also improving service for customers.

Power Connection has been in place for about a year for customers in Massachusetts. Through the program, commercial and industrial customers may choose to have their usage data provided to ESPs registered in the state. Spokesperson Karen Berardino notes that the arrangement depends on securing authorization from customers, however. About 500 customers have participated.

NEES developed a second program, Info Source, through which the company would provide state-registered ESPs with customer mailing data for a fee. The program was never launched though.

"The reason it didn't get off the ground is that the standard offer [in Massachusetts] is at a price where it doesn't make sense to enter the market and probably won't for a while," says Berardino. The company has no other plans to sell customer data, she adds.

An option that may hold greater promise for ESPs is the sale of customer lists to retail businesses. The market potential