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NY Users Prefer Utility in Unbundled Market, BU Says

NY Users Prefer Utility in Unbundled Market, BU Says

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

Specifically, two-thirds of 500 residential customers interviewed said they favored having a choice of gas providers. Of those, nine out of 10 indicated they wanted their utility to be among their choices, and eight of 10 were concerned that their utility wouldn't be offered as an option. When members of the latter group were pressed further, 83% said they would be concerned if they were forced to choose a gas supplier other than BU, and about 56% said they "definitely" wanted BU to be included among their provider choices, said Ron Lukas, general manager of BU, which serves gas customers in three of five boroughs in New York City - Queens, Brooklyn and Staten Island.

This apparent attachment of customers to their utility, as revealed in the KeySpan market research, is "diametrically opposed" to a directive from the New York commission ordering utilities to exit their merchant role over the next three to seven years, he noted at a conference on retail gas access sponsored by the Center for Business Intelligence in Washington, DC, last Monday.

The market research, which was conducted by Los Angeles-based Lieberman Research Worldwide on behalf of KeySpan Energy, also disclosed utility customers wanted "substantial" savings before they would consider switching to marketers.

BU is "committed to moving out of the merchant function...But we have to change the mindset of [existing utility] customers through an education campaign to gain more acceptance" of provider choice and a more realistic expectation of savings, Lukas said. "Otherwise, regardless of what we, the marketers or the state commission want to do, it ain't going to work." KeySpan's market research revealed that 63% of BU's residential customers interviewed were not even aware that provider choice was available to them now.

In the end, once customer awareness increases, Lukas believes customer choice can succeed. But convincing the 600,000 residents in New York City, who use natural gas just for cooking, of the benefits of provider choice is going to be a "real problem," he said, because these are small load-factor customers and any monthly savings they would realize by switching to marketers would be very small.

Susan Parker

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