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BENTEK Study Finds Commercial Customers Distrust Marketers

January 11, 1999
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BENTEK Study Finds Commercial Customers Distrust Marketers

A new study finds all is not well with the relationship between energy marketers and service companies and their commercial customers. Indeed, BENTEK Energy Research says "commercial customers feel marketers and ESCOs promise prices that are not realized, underperform on services, and they are not meeting customers' needs in helping to reduce their energy consumption."

The study found large commercial customers embrace energy deregulation and want to centralize their energy procurement and management functions into a limited number of suppliers, but they are distrustful of prospective suppliers and service providers. Commercial customers perceive non-utility energy companies as promising prices that frequently cannot be realized. In addition, several survey respondents expressed skepticism that energy commodity suppliers will aggressively help them reduce energy consumption. Service companies, particularly those related to equipment manufacturers, are also viewed as too prone to promote their own company's equipment instead of recommending the "best" solution.

Customers or prospective customers in 10 industries were surveyed: schools, hospitals, office buildings, warehousing, grocery stores, hotels, dry cleaning, restaurants, retail, and light manufacturing. Some have had more experience with energy marketers than others, said BENTEK Project Manager Michael Hoehn. "If you look at the dry cleaning industry, that's an industry that has been significantly penetrated [by marketers]. A lot of those dry cleaners have been burned and been burned in very bad ways." Hoehn said one of the dry cleaners in the survey ended an association and was in the process of looking for another marketer while the survey was taking place. Industries that have not had as much direct experience with marketers have their impressions shaped by others. They hear negative comments about marketers and ESCOs from other businesses and industry trade groups, he said.

BENTEK says commercial customers are ripe for aggregation, and one route to aggregating customers is through various industry trade associations. However, Hoehn noted, many of these organizations are only regional in scope. And on the other hand, nationwide marketers still lack the ability to deal with LDC tariffs across the country, which means there still is a place for regional or niche marketers, Hoehn said.

"The slim margins available to marketers operating behind most LDC territories makes sales to the commercial market highly problematic," said Porter Bennett, BENTEK president. "Marketers need to find ways to provide value to customers beyond that which is inherent in the commodity. Becoming a total energy solutions provider is one way to achieve this goal."

Joe Fisher, Houston

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