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Large Commercial Customers:
Utilities have been competing for large industrial customers for years. The threat of relocation, cogeneration, independent power production and a position in the first line of deregulation has prompted utilities to better meet the needs of these important customers. Many industrial customers, of course, have used this leverage to their advantages and have bargained utilities down to a thin or even negative profit margin just to keep their contribution to base loads. While many more skirmishes will occur between utilities, power marketers and large industrial customers, the participants have gained important experience and insight on how future market activities are likely to unfold. How about other segments of the energy market? The next most-important set of participants are large commercial customers. Unlike industrial key accounts, most of these customers have relatively little contact with energy suppliers and little experience in the energy market. Large office building owners don't have much leverage over their current energy suppliers. Economic relocation or cost-based production dispatching are not viable threats and cogeneration or independent power production require more physical space and technical expertise than exists at most sites. Competition will soon change all that. Large commercial customers are suddenly getting closer scrutiny as utilities, power marketers and energy service companies position themselves to compete in this markets.Commercial customers using more than 1 million kWh/year account for about 16 percent of the total US market for electricity, representing more than $30 billion in electricity sales (all of the information presented in this article was developed with MAISY Commercial State-Level Databases).
What to these 150,000 customers look like? The ten largest business segments (which account for 98.5% of these customers) include the expected commercial sector categories.The most interesting feature of the chart below is that traditional utility marketing targets like hospitals, groceries and restaurants, are a relatively small part of the total large-customer market. More than half of the energy in this market is used by 72,000 large retail and office buildings. Marketing energy in each segment will require customized programs. For example, groceries are dominated by large chains while office building owners typically control fewer than five buildings. More detail on these segments is provided in the table below.
Ten Largest US Large Commercial Customer Segments, 1997
Average summer load factors (Av Summer LF) were included in the table to show the significant variations in cost of service that exist across business segments. Higher values indicate that customers, on average, have a consumption pattern that is more even throughout the day, thus using less expensive peak electricity, relative to total electricity. Load factors can be used as a general profitability index to help identify customers with lower cost of service and potentially greater profitability. While business segment load factors provide an average cost-of-service indicator, it is important to recognize that load factors vary substantially within individual segments as well. The chart below shows summer load factor ranges for the middle two-thirds of customer within each segment.
Clearly, just recognizing differences in average business segment load factors is not sufficient information to prioritize marketing efforts and to develop target markets. Many factors contribute to the cost of service variations within the individual business segments. MAISY State-Level Energy Marketing Databases provide users with customer information which can be used to target marketing activities to customers in the upper load-factor category ranges. MAISY databases support development of competitive strategies and programs required by utilities, power marketers and energy service companies. The databases contain over 300 customer variables for commercial and over 500 for residential customers. Over 100,000 records provide an accurate representation of individual state markets and customers in those markets. MAISY Hourly Loads Databases, provide hourly load data for three day-types in each of twelve months for electric, gas and oil for every customer record. (c) 1997-1998, Jerry Jackson Associates, Ltd. All rights reserved. This article may be reproduced for non-commercial purposes as long as this copyright notice is included. |
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