Dismal Results From California's $90 Million 'Choice' Campaign

Even with an $89.3 million, consumer products-style media campaign and aggressive grass roots effort statewide for nearly nine months now, only about 1% of the 10 million Californians eligible to switch electricity providers have chosen to do so, according to the key market players.

Why?The consensus answer is the potential savings from switching are too small for the mass consumer and will be for the next four years.

But other sources blame the statewide consumer education campaign that is supposed to be run independently by state regulators and outside communications contractors with funding from the three major investor-owned electric utilities. Critics claim the utilities have done a good job of having the statewide campaign advocate inaction by consumers. The utilities do not see it that way.

Representatives for the advertising/public relations firms carrying out work for the state said as of April 17, the average call center load continues at 1,600 calls daily, with peak daily averages of 2,700 calls, and the content and "sophistication" of the calls has increased greatly from the initial weeks of operation last fall. Some two million information brochures have been sent to callers, according to DDB Needham's Russel Wohlwerth, who helps oversee the advertising agency's involvement in the consumer education.

A spokesperson for Pacific Gas and Electric said the company to date is "satisfied with the progress and has had a good strong relationship" with the CPUC and the two principal contractors implementing the mass consumer effort. A final survey and analysis of the general public will be completed in June, measuring the level of recognition electric restructuring has among the populous generally.

"We were not impressed with it," said Gary Foster, a Houston-based spokesperson for Enron, one of the largest out-of-state competitors in California. "The results have proved there is still as much ignorance and confusion in the marketplace as there was before [California] spent $90 million, which would be equivalent to some of the largest consumer advertisers in the country."

But a knowledgeable energy consultant involved in other parts of the electric restructuring is not surprised by the lack of solid results "given the current structure not being very competitive until the stranded costs are taken care of (in four years)." In addition, many major marketers are holding back to see how the market further develops, he said.

Focused on the small residential and business customers, the bulk of the three investor-owned electric utilities' 10 million customers, "Plug-in, California," as the campaign is called, provided advertising in television, radio, newspapers and billboards targeted in the territories of the three IOUs, publicity, toll-free consumer call centers, massive printed information materials in English and the major foreign languages, direct mail campaigns and grass-roots community relations efforts.

The bulk of the money went for slick, well-placed advertising. Some of the national Internet-based consumer information sources on electricity reform have openly criticized the California effort as over-priced and under-achieving.

Consumer advocate and president of one of the Internet services, Marshall Cohen, has written to CPUC President Richard Bilas blasting the program as a "fox-guarding-the-hen-house exercise" because he claims the state's major utilities have been calling the shots.

In fact, the utilities are only supposed to have provided funding for the program, although the campaign was conceived by an oversight committee (now disbanded) that included representatives from the three IOUs. The CPUC is running the effort with the help of communications contractors.

Options Limited

"Reports that only 50,000 Californians, which is the current numbers processed -- more are awaiting processing, including 20,000 that Enron says it still is working on -- are participating in this new marketplace-a market of over 10 million people-is a clear indication that there's something terribly wrong with how this is unfolding. The state has overpromised, undereducated and played right into the hand of the big utilities..," Cohen said in his recent letter to Bilas.

Steve McCleary, with MRW Associates, an Oakland-based energy consulting firm, said he does not think another approach to consumer education would have encouraged more customers to switch. "There is just nothing out there to switch to, right now," he said.

Foster said Enron was hoping the messages would have been focused on the simplicity of switching if customers wanted to, without any concerns about reliability. Instead, he believes the ads gave the basic utility message that customers need do nothing.

Enron, itself, is re-examining its own advertising, which was done for the most part the last quarter of last year. "We sort of feel like we got burned with the delay because we spent millions last fall anticipating the Jan. 1 opening (and then it was delayed)," Foster said. "We were really the only ones out there with a mass marketing effort. If no one else is out there, then we don't have to be out front."

Foster did say that Enron was "aggressively" trying to market to large business customers, and he indicated that has remained a very competitive market.

Richard Nemec, Los Angeles

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