Atlanta Natural Gas Customers Not Pleased With Deregulation

A study released last month by Xenergy Inc., an energy consulting, information technology and services firm based in Burlington, MA, found that 46 percent of gas customers in the Atlanta market wish that natural gas deregulation had never occurred, despite being satisfied with their suppliers.

The study, “Retail Gas Markets,” surveyed gas customers in Georgia and Ohio to learn about market share, measure satisfaction with suppliers and explore reasons for switching.

“The Atlanta market has important lessons for gas marketers,” said Robert Ziemer, senior consultant at Xenergy. “The market has been very dynamic, generating lots of excitement. But customers have been frustrated; the residential churn rates have been very high, and rapid expansion led to billing problems that caused two suppliers to leave the market.”

The study found that in the Atlanta market, 67 percent of residential customers and 57 percent of commercial and industrial customers were satisfied with their suppliers. However, more than a quarter of residential customers either selected more than one supplier or were considering switching. Billing problems probably contributed to the switching activity, which took its toll on marketers. Billing was cited as the reason Peachtree Natural Gas and GasKey left the market.

By contrast, the Columbia Gas of Ohio market experienced low churn rates; more than 50 percent of residential and commercial customers were signed up with gas marketers. Most customers who have not chosen a supplier are satisfied with the status quo and will remain with Columbia Gas of Ohio, the study found.

In the Columbia market, where more than 30 marketers are participating, nearly half of residential customers have switched to a new supplier. Of these, 85 percent said they were satisfied with their new suppliers. More than 60 percent of customers who have only one choice of energy supplier said they would remain with Columbia Gas of Ohio even if they were given a chance to switch. The switching rate has been slow but steady, with a low churn rate among suppliers.

Most customers said price was their biggest motivation for selecting new suppliers; although, evidence from the study suggests that reputation and marketing techniques were at least as important in determining outcomes.

The study concluded that the reason for the frustration in Atlanta is that the market moved from completely regulated to totally deregulated within 10 months, and it happened with virtually no educational campaign. In the Ohio market, however, competition for residential and small commercial customers has been present for more than two years, with pilot programs dating to 1996. In addition, the Ohio market had a strong customer education campaign.

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