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

Why?The consensus answer is the potential savings from switchingare too small for the mass consumer and will be for the next fouryears.

But other sources blame the statewide consumer educationcampaign that is supposed to be run independently by stateregulators and outside communications contractors with funding fromthe three major investor-owned electric utilities. Critics claimthe utilities have done a good job of having the statewide campaignadvocate inaction by consumers. The utilities do not see it thatway.

Representatives for the advertising/public relations firmscarrying out work for the state said as of April 17, the averagecall center load continues at 1,600 calls daily, with peak dailyaverages of 2,700 calls, and the content and “sophistication” ofthe calls has increased greatly from the initial weeks of operationlast fall. Some two million information brochures have been sent tocallers, according to DDB Needham’s Russel Wohlwerth, who helpsoversee the advertising agency’s involvement in the consumereducation.

A spokesperson for Pacific Gas and Electric said the company todate is “satisfied with the progress and has had a good strongrelationship” with the CPUC and the two principal contractorsimplementing the mass consumer effort. A final survey and analysisof the general public will be completed in June, measuring thelevel of recognition electric restructuring has among the populousgenerally.

“We were not impressed with it,” said Gary Foster, aHouston-based spokesperson for Enron, one of the largestout-of-state competitors in California. “The results have provedthere is still as much ignorance and confusion in the marketplaceas there was before [California] spent $90 million, which would beequivalent to some of the largest consumer advertisers in thecountry.”

But a knowledgeable energy consultant involved in other parts ofthe electric restructuring is not surprised by the lack of solidresults “given the current structure not being very competitiveuntil the stranded costs are taken care of (in four years).” Inaddition, many major marketers are holding back to see how themarket further develops, he said.

Focused on the small residential and business customers, thebulk of the three investor-owned electric utilities’ 10 millioncustomers, “Plug-in, California,” as the campaign is called,provided advertising in television, radio, newspapers andbillboards targeted in the territories of the three IOUs,publicity, toll-free consumer call centers, massive printedinformation 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 onelectricity reform have openly criticized the California effort asover-priced and under-achieving.

Consumer advocate and president of one of the Internet services,Marshall Cohen, has written to CPUC President Richard Bilasblasting the program as a “fox-guarding-the-hen-house exercise”because he claims the state’s major utilities have been calling theshots.

In fact, the utilities are only supposed to have providedfunding for the program, although the campaign was conceived by anoversight committee (now disbanded) that included representativesfrom the three IOUs. The CPUC is running the effort with the helpof communications contractors.

Options Limited

“Reports that only 50,000 Californians, which is the currentnumbers processed — more are awaiting processing, including 20,000that Enron says it still is working on — are participating in thisnew marketplace-a market of over 10 million people-is a clearindication that there’s something terribly wrong with how this isunfolding. The state has overpromised, undereducated and playedright into the hand of the big utilities..,” Cohen said in hisrecent letter to Bilas.

Steve McCleary, with MRW Associates, an Oakland-based energyconsulting firm, said he does not think another approach toconsumer 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 beenfocused on the simplicity of switching if customers wanted to,without any concerns about reliability. Instead, he believes theads gave the basic utility message that customers need do nothing.

Enron, itself, is re-examining its own advertising, which wasdone for the most part the last quarter of last year. “We sort offeel like we got burned with the delay because we spent millionslast fall anticipating the Jan. 1 opening (and then it wasdelayed),” Foster said. “We were really the only ones out therewith a mass marketing effort. If no one else is out there, then wedon’t have to be out front.”

Foster did say that Enron was “aggressively” trying to market tolarge business customers, and he indicated that has remained a verycompetitive market.

Richard Nemec, Los Angeles

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