Electricity buyers with multiple facilities are eager toconsolidate power buying activities from myriad suppliers to just ahandful when competition comes, according to a recent survey.
According to the survey, national accounts – large businesseswith multiple sites, such as chain stores, franchises, banks, andrestaurants – intend to reduce their roster of electricitysuppliers by 80%. The current average of 60.5 providers per chainwill drop to 11.6 per national account as chains seek toconsolidate energy purchase decisions. Restaurants and food chainsforecast the greatest reductions.
These results highlight the fourth annual assessment of nationalaccounts customers conducted by RKS Research & Consulting, anationwide market research and polling firm. RKS interviewed 267energy decision-makers responsible for 173,000 separate businesslocations across the U.S. Current estimates are the nation’selectric utilities derive 25% of their revenues from nationalaccounts.
“These large and demanding businesses increasingly view energyas a commodity, with the result that price is now becoming themajor factor in the purchase decision,” said Carmine Grastataro,RKS vice president. “Utilities will have to choose between thestrategy of engaging in hard-nosed bidding for low-cost contractsor developing a national brand to package and differentiate theirproduct and service offerings.”
National account respondents identified 12 companies for serviceand responsiveness to customers. The top vote-getter was SouthernCompany, followed by Duke, PG&E, AEP, and Cinergy. The balanceof the field includes Texas Utilities; Tennessee Valley Authority;SCE/Edison International; Florida Power & Light; NorthernStates Power, Virginia Power, and Washington Water Power. Enronalso received high marks as a desired new source of services.
The RKS survey shows some promising trends for energy servicecompanies and brokers. Nearly half of national accounts do not buyadditional services (firm power, inspections and powerconditioning, natural gas fuel cells, etc.) from their currentutilities. But 64% expressed interest in a bill combining gas andelectricity with water, sewer, and trash services.
“From these results, it is clear that national accounts areseeking simplicity and economy in dealing with their energysuppliers,” Grastataro said. “In analyzing these responses andtalking to these customers in focus groups, we see opportunitiesfor utilities and energy service companies to repackage theirproducts, service offerings, and pricing plans. The fact that largenational chains want to reduce costs and simplify their workloadscreates opportunity for those suppliers who are willing to investin a brand strategy and tailored service offerings.” For copies ofthe study, contact RKS Research, (914) 277-6900.
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