Serving residential and small commercial customers is a smallmargin business and Columbia Energy is planning its strategyaccordingly for its entry into the Georgia market. Columbia won’tbe sinking large dollars into a statewide brand name advertisingcampaign as several other retail marketers did prior to the Nov. 1start-up of the largest retail unbundling in the country. Instead,Columbia plans an aggressive direct marketing program that focuseson attractive pricing and customer service.

“Our price offer is intended to be in the middle [of the rangeof retail marketer price offers],” said Jim DeLong, Columbia’sresidential marketing director. “We’re not trying to be the priceleader. The price leader probably won’t be there at the end of theday. Certainly being the most expensive is not a sound strategy. Wetry to price our products based on what the customers want, and wetry to provide additional value.” Columbia is offering Atlanta GasLight (AGL) customers a guaranteed bundled gas delivery price of39.9 cents per therm ($3.99/MMBtu), a savings on gas costs of 18%for residential customers and 19% for small commercial buyerscompared to AGL’s charges over the last six months.

“We’ve just found that especially in a market like Georgia it’sbest to let some of the dust settle in the first month while thereare efforts by Atlanta Gas Light and even some competitors willingto spend and overspend on advertising to help the market understandwhat is going on,” said DeLong,. “Unfortunately, this business doesnot support an aggressive brand marketing effort. There are verysmall margins.”

Nor does Columbia believe packaging telecommunications, homesecurity and other products with gas and electricity is the way togo. Others in the Georgia market plan to try that, but it has”never been a model that has worked. If someone makes it work,obviously there would be a reason to reconsider it. But soundmarket strategy revolves around focus. Why would you buy homesecurity from a gas company?”

Columbia’s focus on customer service includes quoting a ratethat includes all the costs of gas delivery, includingtransportation, storage, both upstream and on AGL’s system. “Thereare several competitors not doing that. There’s some whose price onits face looks low, but you don’t know that because it’s just thecommodity portion,” said DeLong. In Atlanta Gas Light’s program, alot of the charges are being based on a customer’s peak day usage,which varies greatly from customer to customer.

Columbia believes it gained a big advantage in Georgia byforming an alliance earlier this week with Amway. There are 25,000loyal Amway distributors in Georgia. Most, if not all, are likelyto sign up with Columbia, said DeLong. “It will be a very strongstart.” (See related Story, this issue)

The company also is offering a “satisfaction guarantee” and anew proprietary software, called EnergyHelp, which shows customershow to save up to 30% on their total gas and electric energy costs.Columbia said EnergyHelp retails for $59.99, but will be free toGeorgia residential customers. Columbia will offer the commercialversion of the product for $49.95, a $250 savings.

Rocco Canonica

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