The new merchant gas and power companies, getting battered in the public arena as they move into new operating areas across the country, are going to have to heavy-up their public relations operations to ward off reactive laws and regulations restricting the competitive market.

One of the most important things companies can do to establish their credibility is to warn the public in advance, if they see problems on the horizon, said Larry Ash with Six Sigma Worldwide of Fayetteville, AR, in a discussion session at GasMart/Power 2002 in Reno on improving the image of the energy industry. “Once you have the major problems, it’s too late.” Success in communicating with the public involves a long-term, multi-faceted strategy led by the CEO and involving all the company’s employees.

When the California crisis erupted, the governor was able to demonize power producers that had their headquarters out-of-state, because they were unknowns to most Californians. Some of the highest prices charged during the crisis were from the Los Angeles Department of Water & Power, but because of its constituency, the governor didn’t take them on — focusing his vilification instead on the out-of-staters.

Kevin Elliott, senior managing director with Hill & Knowlton, who led the session, pointed out that a coordinated, wide-ranging, long-term campaign is necessary to establish a company’s credibility with the public. The CEO needs to take the lead and make public relations a priority. Elliott said a good place to start is by having top executives sign up to address local civic organizations, which include community leaders and trend-setters, and open up question-and-answer sessions with the editorial staff of local newspapers.

Other participants suggested that energy merchants could face similar problems with public perception and political pressures in the Northeast this summer if it’s a hot summer and power runs short. It’s also an election year, and politicians are looking for issues to sensationalize. Ash said the companies should be warning consumers now and preparing them to conserve. Others pointed out that California could again be a problem this summer, and the state should not be so hasty in attempting to renegotiate its long-term contracts. Energy merchants should be attempting to educate the public now on how the market will work during a hot summer.

Companies also shouldn’t just focus on the major newspapers and TV stations with their public statements. In California, for instance, executives would do well to visit and/or communicate with the multitude of smaller newspapers and radio and TV stations throughout the populist state, Ellen Beswick, NGI editor advised. She also suggested that as their futures are more and more dictated by initiatives pushed by the general population, energy companies are going to have to put more focus on communicating and educating the masses. They need to train and encourage many of their executives and employees to respond to questions from the public and the media with something more than platitudes. And given the complicated nature of the energy industry and the forces that propel it, they will have to do more in the line of education.

Susan Harkness with OGE Energy said public relations efforts should not try to explain too much at once. Because it is so complicated and the public has a short attention span for “dry” material, information should be in small, easily digested doses. She also endorsed warning the public in advance when there can be problems ahead, citing OGE’s experience recently when the company, for the first time in its history, faced the possibility it would have to go to rolling blackouts. The public relations department started rolling out messages to the public “every hour,” through every avenue, urging conservation over the following 48 hours. The public responded, a crisis was averted, and OGE bought a full-page ad in the local newspaper the next day applauding the public’s efforts.

Harkness pointed out that like most established utilities, OGE, which celebrates its 100th anniversary this year, has developed a many-faceted, long-term relationship with the community it operates in, through corporate efforts and through interaction of its employees in the community. The challenge now for new merchant energy companies, operating in many different areas and communities, is to develop and carry out a broad and deep public awareness campaign to ensure the survival of their market-based operations.

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