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Off Peak

Payoffs don't stack up to the work involved in switching suppliers, say businesses.
Fortnightly Magazine - September 15 2000

Off Peak

September 15, 2000

The Big Letdown

Payoffs don't stack up to the work involved in switching suppliers, say businesses.

Switching electric suppliers appears to make for disappointed business customers.

According to a national study of U.S. businesses conducted by RKS Research & Consulting in late spring, those that switched electric suppliers in hopes of lowering their bills express the lowest level of satisfaction in all areas of supplier performance other than price. Companies that stayed with their providers, by contrast, not only are more satisfied, but also give their supplier high marks in all major areas of performance, from cost savings and customer service to billing and usage information.

These findings can be explained in large part by customer expectations, according to Carmine Grastataro, senior vice president at RKS.

"Expectations are essentially the highest among the groups that have recently been exposed to choice for the very first time or are anticipating choice in a very short time period, like maybe the state of Ohio," he says. "The areas that we're describing in the study with disappointment in performance, those are the areas that have had choice for some time-Pennsylvania, California, New Hampshire, places like that. They have been through the process of selecting a provider more than once in a lot of cases."

Too Much Trouble.

Their disappointment, says Grastataro, often reflects a view that any savings amount to far less than the time and human resources involved in comparing supplier bids, negotiating contracts, and getting necessary approvals. "They take a position that, 'It's the best business decision for us-for our use of resources- to go ahead and choose another provider because for all the time, effort, and work that goes into it, we're not going to get a return.'"

Then Poor Care.

Customers that have switched also cite billing problems and a lack of customer service after the contract is signed.

"[Retail suppliers] went out and made these great sales pitches, and then when people had questions, there was nothing after that. They literally would leave telephone messages for people and no one would call them back," says Grastataro.

"That's where I'd give [incumbent utilities] the advantage of being in the driver's seat [in that] they have answers to the questions, that they can assure people, 'Don't worry, no matter what happens we're here for you.'"

And Reliability Worries Grow.

The RKS study also found that although businesses give high marks for power reliability, it is something they're increasingly worried about. As the economy grows more energy intensive and equipment is more sensitive to power problems, businesses place a premium on clean, reliable power. Many would even seek a new supplier to find it.

Notes Grastataro, "For the most part, they are looking at, 'What can I do to make sure I have clean power?' and 'What can I do to make sure prices stay low?'"

Not happy with what energy companies can offer, he says, businesses are looking elsewhere to answer those questions-to distributed generation, and to increasing their buying power through aggregation.


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