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Washington Gas Uses Encryption Technology

Washington Gas Energy Services, a Washington Gas affiliate that provides deregulated natural gas and other energy-related products in the Washington area, started using an encrypted energy information system last week in hopes of marketing its customer information more effectively.

EEIS from International Business Ventures, a Pittsburgh-based energy marketing consulting firm, encrypts customer information, such as gas usage, and makes it more cost-effective to share the information with energy marketers wanting to offer consumers customized energy prices and services.

“The system allows utilities [that] have the data to share their information with marketers [that] need the information to compete in an effective manner despite the fact that consumers put pressure on the utilities to protect information,” said IBV president Ken Cuccinelli.

Using customer information to market targeted products and services is new to utility marketers, many of which are just getting their feet wet in a newly deregulated marketplace.

“Privacy is a hot-button issue today, and consumers are concerned about a loss of privacy when their personal data is transferred to energy suppliers,” Cuccinelli said. “Utility companies are concerned as well. Because they were monopolies and regulated, they never did any marketing with their customer lists or gave them to their marketing subsidiaries. It was always a very protected item. This is culture shock for them, to give this data out.”

Currently, energy marketers cannot quote a price to a customer without information about the customer’s energy usage, but they cannot get that information without the customer’s consent. In most cases, when telemarketers call consumers to obtain some of this usage information in order to offer them targeted products or services, consumers must send a signed form to the utility if they want to receive the offer. This allows the utility to check the customers' history in its database and get the necessary information to offer the appropriate products or services. In many cases, weeks can go by before the information is available.

Cuccinelli said utilities often have had to provide the information to marketers literally one customer at a time, which drives up the utility’s operating costs and raises the marketer’s customer acquisition costs. The process can cause consumer dissatisfaction on two counts. Weeks can pass from the energy marketer’s initial contact until the consumer finally gets a price. In the meantime, the consumer has no idea what is happening or who has access to the confidential information.

“While the current system protects privacy, it is tremendously inefficient. So far, there has been no way for utilities to transfer this information without violating the consumer’s right to privacy,” Cuccinelli said.

Because each account is individually encrypted, a separate and distinct key — such as the consumer’s account number — is required to access a consumer’s data. The energy supplier can access an individual’s identity only after the consumer gives permission by providing the key.

When a consumer calls Washington Gas to ask a question or when a telemarketer calls the consumer to try to sell a product or service, Washington Gas can view the customer’s usage data only after the customer gives permission by providing the password. With this information in hand, the utility or telemarketer can offer the customer a special price quote or more information on another product that might be of interest based on energy usage.

“When Washington Gas looks at a file, the names and address information will be encrypted,” said Cuccinelli. “But next to it is the usage data. And when the consumer gives them the password, then they can see that person’s usage information, and they can offer that customer a special flat rate [for] a specific kind of gas. However, if the consumer decides [he or she does not] want to be bothered, the consumer is still in control.”

Nonutility energy suppliers can access anonymous usage data in advance to develop products and payment plans tailored to the local market and then can prepare individual quotes on request.

EEIS was developed by Pittsburgh-based WeatherWise USA, the developer and marketer of the WeatherProof Bill — a predetermined, guaranteed annual energy bill that does not change regardless of changes in the weather or energy prices.

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