The majority of Brooklyn Union Gas’ (BU) residential gascustomers in New York City and Long Island said they want to keeptheir existing utility as a provider in a competitive retail marketor at least have it offered as an option, according to the resultsof market research conducted for parent KeySpan Energy. Thefindings, which reveal a continuing customer connection to LDCs,fly in the face of the New York Public Service Commission’sdirective ordering all utilities to exit the merchant gas role.

Specifically, two-thirds of 500 residential customersinterviewed said they favored having a choice of gas providers. Ofthose, nine out of 10 indicated they wanted their utility to beamong their choices, and eight of 10 were concerned that theirutility wouldn’t be offered as an option. When members of thelatter group were pressed further, 83% said they would be concernedif they were forced to choose a gas supplier other than BU, andabout 56% said they “definitely” wanted BU to be included amongtheir provider choices, said Ron Lukas, general manager of BU,which serves gas customers in three of five boroughs in New YorkCity – Queens, Brooklyn and Staten Island.

This apparent attachment of customers to their utility, asrevealed in the KeySpan market research, is “diametrically opposed”to a directive from the New York commission ordering utilities toexit their merchant role over the next three to seven years, henoted at a conference on retail gas access sponsored by the Centerfor Business Intelligence in Washington, DC, last Monday.

The market research, which was conducted by Los Angeles-basedLieberman Research Worldwide on behalf of KeySpan Energy, alsodisclosed utility customers wanted “substantial” savings beforethey would consider switching to marketers.

BU is “committed to moving out of the merchant function…But wehave to change the mindset of [existing utility] customers throughan education campaign to gain more acceptance” of provider choiceand a more realistic expectation of savings, Lukas said.”Otherwise, regardless of what we, the marketers or the statecommission want to do, it ain’t going to work.” KeySpan’s marketresearch revealed that 63% of BU’s residential customersinterviewed were not even aware that provider choice was availableto them now.

In the end, once customer awareness increases, Lukas believescustomer choice can succeed. But convincing the 600,000 residentsin New York City, who use natural gas just for cooking, of thebenefits of provider choice is going to be a “real problem,” hesaid, because these are small load-factor customers and any monthlysavings they would realize by switching to marketers would be verysmall.

Susan Parker

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