MAISY Electric Utility Clients Reflect an Industry on the Move

1/28/98

MAISY Electric Utility Clients Reflect an Industry on the Move

Just a few years ago, industry consensus was that competition for mass accounts was far enough in the future that attention to small and medium-size customers could be safely deferred. Since that time, movement toward competitive markets has been much speedier than expected in most states, leaving even less time to develop marketing strategies to compete for the millions of residential, commercial and small industrial accounts who will soon have a choice of energy providers.
To what extent has the energy industry begun preparing for this competition? The answer to this question will determine, in part, the nature of the competitive battle that has already begun.
Site licenses for MAISY energy marketing database products are a good general measure of mass account marketing activity since these databases provide the only extensive source of state-level energy related customer characteristics.¹
Current mass-account marketing activities are relatively uniform across the country as indicated by the distribution of site licenses for MAISY Energy Marketing Database Products.

The chart on the right reflects the distribution of site licenses by utility size where size is measured by the number of residential customers served by each utility.

The next chart shows the fraction of utilities within each size category who have licensed one or more database products.

The final chart reveals the range of current residential price competitiveness across utilities who are using the marketing databases. Each bar shows the percent of utilities whose 1996 average residential electricity prices were below the average residential prices in the respective regions (e.g., in the Southeast, 8 of the 12 utilities had 1996 residential prices lower than the regional average of 7.39 cents/kWh).

While this brief peek over the shoulders of electric utility energy marketing departments is too limited to draw sweeping conclusions, these data suggest several interesting observations:
1. The reasonably even regional distribution of site licenses suggests that national trends, rather than specific activities within the individual states are prompting the new marketing focus on mass accounts.
2. The distribution of licenses by utility service area size indicates that while utilities of all sizes are focusing on residential and commercial marketing issues, the larger the utility, the more likely it is to have begun its mass account marketing efforts.
3. Utilities who already have a competitive price advantage are actively assessing mass account markets. A combination of lower costs and proactive mass account marketing programs may make many of these utilities formidable competitors.

¹Maisy energy marketing database products have been licensed for use at 51 utilities in the US. These service areas contain approximately 30 percent of all residential customers in the nation.
Sources for data are Jackson Associates license data and Electric Sales and Revenue, 1996, Energy Information Administration, DOE/EIA-0540(96), December 1997.
(c) 1998, Jerry Jackson Associates, Ltd. All rights reserved. This article may be reproduced for non-commercial purposes as long as this copyright notice is included.