E-Commerce Set to Grow Exponentially in Retail Energy Industry

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Electronic commerce in the energy industry is positioned to take off next year, according to a recently released study by Chartwell Inc., an Atlanta-based publishing company serving the utility industry.


The study - Chartwell's Guide to E-Commerce in the Energy Industry - found that about half of U.S. electricity and natural gas providers, propelled by regulatory changes and competition, will offer a variety of Internet-based customer services such as electronic bill payment, electronic bill presentment and online sign-up by 2001.


"Many are looking to the Internet to carve their niche in the newly-designed energy marketplace," said Dennis Smith, editorial director at Chartwell. "Whether it be the big, traditional utility providing its customers with value-added services such as Internet-based bill presentment and online energy audits or the competitive energy supplier bidding on energy contracts over the Web, it is evident the Internet will play a large role in the way retail energy companies operate."


Smith said that, as a whole, energy providers have been slower than other industries to adopt Internet-based services because of regulatory uncertainty and because most utilities still operate as monopolies. "But that is changing as more states open their borders to competitive energy suppliers," he said.


The findings are based on a survey of 101 small and large energy companies, such as Boston Edison Co.; Central Maine Power Co., Augusta, ME; First Energy Companies, Akron, OH; San Diego Gas & Electric; and Otter Tail Power Co., Fergus Falls, MN. The randomly-selected companies were called by Chartwell in October and marketing or e-commerce executives at the utilities were asked a series of 25 questions about their feelings surrounding e-commerce and their current and future initiatives.


Specifically, the study found that electronic bill presentment and payment will grow significantly in the coming two years. While roughly only 10 percent of utility companies - primarily large investor-owned ones - currently offer these services, more than half are planning to launch some form of e-billing in two years.


"These services are popular because they are core utility services," said Smith. "The bill is the traditional connection utilities have to their customers; and when utilities find ways to make paying bills more pleasant for the customer, that's a value-added service." These services also allow utilities to reduce their mailing and telemarketing costs.


The study also found that most utility companies are using a very low-key approach to advertising and promoting these services, relying on mediums commonly tapped by traditional utilities that have a history of low market penetration and response such as bill inserts, company newsletters, and advertising messages on the bills themselves. In some cases, companies' home Web pages are being used.


Energy companies that do invest in promotional channels are concentrating on direct mail to promote their Web products and services. Direct mail is regularly or heavily used to advertise Internet services by 30 percent of the companies surveyed.


First Energy Companies, an energy services company based in Akron, OH, is an example of a Web-savvy company that offers a glimpse of where utility companies are moving in terms of e-commerce.


The company offers energy services to 2.2 million residences in western Pennsylvania and northern Ohio, as well as energy services to commercial customers in these areas and in parts of New Jersey and Maryland. Its operating companies include Ohio Edison, The Illuminating Company, Penn Power and Toledo Edison.


Since fall, First Energy has had customer care Web sites for all of its operating companies that offer customers electronic bill presentment and bill payment services. By next year, First Energy plans to roll out additional e-commerce services such as those allowing customers to monitor their energy usage or arrange for their energy services to be turned on or off thorough a Web site.


Kevin Keough, vice president of business planning and ventures at First Energy, said that the company will experiment with online inserts - meaning advertising its additional products or services on First Energy Web pages where customers pay their bills electronically. The company will be able to personalize these pages on an individual or geographic basis.


"The space on the Web site provides us the opportunity to advertise other services we offer such as landscape lighting services or appliance repair products," he said.
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