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It's a Good Thing Prices Are Second to Reliability

It's a Good Thing Prices Are Second to Reliability

Although price probably will be the most important factor influencing energy decisions after this winter, it is the other things, such as reliability and customer service, that so far have determined the winners and losers in the gas sales business, according to a new survey by RKS Research & Consulting.

A majority of American businesses say reliable supplies and good service remain the most important factors in their gas purchasing decisions, RKS said after interviewing about 800 energy purchasing managers for large endusers during the months of May and June.

Only the largest transportation clients - those who pay brokers or marketers for delivered gas - shop solely on the basis of price, according to the survey. These transportation clients gave higher satisfaction ratings to marketers compared to regulated local gas utilities.

"These scores indicate that business customers are reducing natural gas to a commodity purchase, a perception that fails to distinguish one supplier from another," said Rick Ginter, RKS director of research and project leader for this survey. "Those suppliers that add services in such areas as energy management, consulting and billing and increase their customer communications stand the greatest chance to preserve and grow market share."

The Year 2000 Natural Gas Business Customer Survey includes the details of telephone interviews with 106 transport clients, and 694 commercial and industrial sales customers who depend on a single gas utility for energy supply and services.

The survey indicates rising interest among business customers in additional gas-fueled products. For instance, six in 10 commercial transport customers find appeal in gas-powered air conditioning, while half the industrial transport customers are intrigued by on-site electricity generation.

This survey is RKS' third in-depth poll of corporate purchasers of natural gas in the last five years. It reveals striking differences between sales and transport customers. For example, while all customer segments agree that the guarantee of a reliable gas supply is their most important purchase criterion, transport clients place price next in importance. In contrast, sales customers place price behind supplier honesty and fulfillment of its service obligation.

More than half of the businesses surveyed now have the option to choose their gas suppliers, according to the RKS data. Among all business customers interviewed by RKS, 13% reported switching gas suppliers. Nearly half of these respondents - 48% - say they are now paying lower prices for their natural gas.

Transport customers also remain the most critical market segment, according to the survey. For example, more than half - 52% - of commercial transport customers feel they pay too much to their local gas distributor. A third of transport customers rate their marketers high in value received. And only a quarter - 23% - see their local distribution company as more than a source of natural gas and remain critical of their local supplier's business retention efforts.

A quarter of transport clients say that switching or dividing energy supply from delivery has increased their administrative burden. Sales customers cite the extra workload as a major reason for not switching or unbundling suppliers.

"This finding may actually create opportunities for distributors," said Ginter. "Taking the lead to combine billing statements, creating transparent systems and assigning a single point of customer contact may all help to raise profile of the local supplier."

For copies of the study contact Joan Eckels at (914) 277-6900, ext. 102.

Rocco Canonica

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