With total electricity sales likely to creep along at a snail’space of 1.2% growth each year over the next five years, picking theright market to set up shop could be the difference between lifeand death for many power marketers and utilities, according to apresentation made last week by Mark J. Bock, senior economist onelectric power from WEFA Inc.

Given such slow growth in electric sales, power marketparticipants will be forced to increase sales (and revenues) bytaking market share away from other players. Understanding wherethe best markets are, however, will be critical.

According to the Utility Market Intelligence model, created byWEFA, a seller of electricity could increase sales growth by asmuch as 100 basis points over the U.S. average by focusing on thefastest growing states. The second interesting point, Bock statedin his presentations Oct. 25 to the WEFA Energy Annual Conferencein New York, is that only 200 basis points separate the fastestgrowing states from the slowest growing states. “Thus there isn’tmuch room for error.

WEFA determined that the top 10 states likely to experience thefastest electric power sales growth over the next five years areUtah (1st), Arizona, Colorado, Florida, Nevada, Virginia, NewJersey, Delaware, Missouri and South Dakota.

By narrowing the selection process even further down to themetro level, power sellers could increase sales by nearly 250 basispoints over the U.S. average, according to Bock. The top five metroareas likely to experience power sales growth over the next fiveyears are Austin-San Marcos, TX (1st); Tuscon, AZ; Orlando, FL;Columbia, MO; and Charlottesville, VA.

Some states have more fast growing metro areas than others,however. States such as Arizona and Colorado have a few fastgrowing metro areas, in contrast to states such as Florida, wherenearly half of all of its metro areas are ranking in the top 25 byWEFA. As result, seller would do better to focus their effort in afew select metro areas in some states while blanketing others withstatewide marketing campaigns, said Bock.

Another factor that could determine winners and losers in agiven market is the types of industries targeted. Some of theindustries that fit into WEFA’s “Big Winners” category, includenursing and personal care facilities, medical clinics, computerdata processing facilities, business services groups, andengineering and architectural services firms.

Utilities and power marketers would be well advised to avoidwhat WEFA calls the “Time Wasters” and the “Dogs.” Time wasters arethose industries that are growing quickly but use very littlepower, while the dogs are those industries that use little powerand are growing very slowly or even declining.

Rocco Canonica

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