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Choice Available to Some But Those Choosing Are Few

Choice Available to Some But Those Choosing Are Few

According to a recent survey, one in six U.S. consumers, or 17%, say they can now choose their energy suppliers. However, only 2% have actually changed providers.

"In probing the reasons surrounding the switching decision, we heard most consumers saying that energy companies still pretty much all look alike," said Charleen Heidt, vice president of RKS Research & Consulting, a national market research and public opinion polling organization. "At the present time, customers see very little difference between one supplier and another. But the data suggest they will respond to a compelling offer from a different entity that sets itself apart from the pack. Our findings indicate that few energy companies are reaching out proactively to their residential customers; the early entrants who do so may rapidly build market share."

On the gas side, the U.S. Department of Energy's Energy Information Administration found in a June survey that a total of about 8% of the residential gas customers in the country are actively choosing gas suppliers other than their local utilities. EIA determined that while 45% of the nation's residential gas customers are now eligible to buy gas from alternative suppliers only about 18% (or about 1.8 million people) of those eligible (9.3 million) are doing so.

There is a wide variance in participation levels among consumers who have a choice of gas suppliers. "In some states, such as Nebraska, 97% of the eligible residential and commercial customers are electing to choose their own suppliers. In other states, such as Indiana and New York, participation is 2% or less of those eligible," EIA noted in a survey summary.

For its survey, RKS interviewed 999 heads of households during May and June and conducted consumer focus groups in Boston, Pittsburgh, Houston, and San Diego. The survey found widespread satisfaction with customers' current energy providers, with 75% saying they would recommend their supplier to others. And 43% said they are very likely to remain with their present supplier when they have a choice. Loyalty drops off quickly --- to less than 20% --- among households with frequent outages or billing and service problems with their supplier.

RKS found that more than a third of U.S. consumers believe deregulation and increased competition will make investing in energy securities more attractive. Of those surveyed, one in 10 currently holds stock in one or more electric utilities or holding companies. Customers who are more critical of their electricity service and profess less loyalty to their current provider believe deregulation will increase the investment outlook for energy stocks, RKS said.

Joe Fisher, Houston

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