[BETA] Fortnightly

Current utility marketing efforts focus almost entirely on large customers or "key" accounts, responding reactively to competitive threats such as self-generation, municipalization, and even geographic relocation. These threats have become all too real for many utilities. Niagara Mohawk Power Corp. has lost 15 percent of its large industrial load in the last 15 years. The recently negotiated long-term power contracts between Detroit Edison and the Big Three automakers are a conscious response to the looming threat of retail wheeling.

In the utility industry's brave new world of deregulation, information technology (IT) (em and, specifically, "outsourcing" (em has acquired an entirely new meaning.

IT has become strategic. And important. So important that utility companies are seeking outside expertise to help them leverage technology to conduct business more efficiently, help grow revenues, and hone their edge in the new competitive world. Time has become an unaffordable luxury.

Imagine you're the principal energy buyer for a national chain of managed health care centers, with a $200-million annual energy tab. Top management asks you to assess how the chain can cut its energy bills.

You turn to your local electric and gas utility, which talks a lot about customer service, but doesn't have much to show for it yet.

Everybody's talking about electric utilities dabbling in telecommunications. That's fine. But how about vice versa? Maybe what we've really got is telephone companies (and cable television, too) getting into energy. That's different.

RETAIL DEREGULATION:

A TRANSFORMING EVENT

Retail sales of gas and electricity run about $300 billion a year. The deregulation of energy production, wholesale logistics, and bulk consumption has brought competition to about 40 to 45 percent of the value chain from wellhead and busbar to the retail meter.

Public Service Co. of Colorado (PSCC) and IBM have announced a strategic alliance. IBM's subsidiary, Integrated Systems Solutions Corp. (ISSC), and a new PSCC subsidiary, e prime, will develop and deliver new information technology applications to improve utility customer service. E prime's first project will be to help IBM develop a natural gas procurement strategy to reduce energy costs and improve the quality and reliability of its energy services. ISSC will manage most of PSCC's information technology systems and network infrastructure.