Although the public’s overall awareness of energy deregulationhas inched up over the past three years, a majority of residentialand business customers surveyed say they still know next to nothingabout the issue and its potential effect on them, according to theresults of two major surveys issued last week.

Six out of ten residential energy customers on average still arebasically in the dark on the subjects of electricity and naturalgas deregulation, revealed an annual study by Yankee Energy System,parent of Yankee Gas Services of Meriden, CT. Despite the poorshowing, it found that residential customers’ awareness has grownsince 1996, when about eight in ten were unfamiliar with the topic.

The low level of residential awareness is due to the fact that”consumers only become aware of deregulation issues when they arebeing directly affected by them in their own state,” said YankeeEnergy Chairman Branko Terzic at a press briefing in WashingtonD.C. “This is because all utility prices are local – consumersdon’t care about prices in other states. It’s almost irrelevant tothem, like the differences in prices of houses from state tostate.” He noted that residential awareness is highest in theWest (53%) and Northeast (50.8%) due to greater customer-choiceactivity by the states and imore merger activity.

At the same time, a national survey by RKS Research &ampConsulting in North Salem, NY, found that only 31% of themedium-sized businesses polled reported receiving information onelectricity deregulation, and half had not heard of major nationalmarketers such as Enron, Duke Energy or Southern Company. “Fromthis data, it’s clear that mid-sized U.S. businesses have only ablurry view of the realities of energy competition,” said RKSPresident David J. Reichman. But larger regional businesses (withmultiple sites) are faring better. More than half (59%) havereceived deregulation information from their current suppliers, and44% already have done business with a major energy marketingcompany, the survey noted.

The Yankee Energy study, which polled about 1,000 residentialcustomers across the United States, focused on both electricity andnatural gas deregulation. Of those surveyed, it found that only38.1% in 1998 were aware of deregulation, compared to 22.9% in1996. In contrast, the RKS Research survey, which culled responsesfrom 692 mid-sized business and 400 larger regional businesses, concentrated solely on electricity restructuring.

Overall, the Yankee Energy survey found that a majority ofresidential customers (about 60%) either don’t believe there willbe any benefits or don’t know if there will be any benefits as aresult of electric and gas deregulation. Benefits could includelower rates, increased service, more competition or other. On apositive note, however, fewer people this year think that electricrates will increase with the onslaught of competition (38.1% in1998 compared with 50.6% in 1996), and a greater number believethat electric rates will drop (46% this year compared to 37.8% in1996.)

As for the effect of deregulation on gas rates, residentialcustomers were almost evenly split that rates either would increase(37.2%) or decrease (38.4%). The percentage of respondents whothink gas rates will increase under competition has droppedsignificantly since 1996, from 48.9% to 37.2%, according to thesurvey.

Still, the majority of residential consumers (52%) don’t thinkthat they’ll benefit from gas deregulation. The Yankee Energy studypointed out, however, that only about half of these customers havenatural gas available to them or use gas for heating their homes.Approximately 32% said they expected to see benefits from gasderegulation, while 16% said they didn’t know.

Not surprisingly, residential users cited rates as their biggestconcern in deregulated electricity and natural gas industries. ButYankee Energy’s Terzic doesn’t think residential rate savingsshould be the yardstick by which the success of competition isjudged. He said he believes it’s important to introduce competitioninto both the gas and electricity markets, even if the immediateresult isn’t low rates.

“I’m afraid that some stakeholders [have] sold the notion that[the] only time that society benefits from electric restructuringor gas restructuring is if there’s an immediate huge residentialsaving. I don’t think that’s necessarily true,” he told reporters.”If the only benefits are improvements in industrial rates [thatmake] our economy more competitive, that’s a good thing by itself,assuming you don’t raise residential rates.”

Those trying to tie the success of energy deregulation toshort-run rate decreases for residential customers could wind upbeing disappointed, Terzic noted. “If we’re going to be advancingthe notion that restructuring of the electric and gas industry isonly done for the immediate [rate relief of the] residentialratepayer,” residentials will look at their meager savings and say”it’s not worth the hassle” to switch.

Susan Parker

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