NGI Archives | NGI All News Access
Marketers Struggle to Prepare for Georgia Competition
Scana Energy Marketing could have the early lead in Georgia’sretail gas market. Its mass marketing campaign and generousincentives for residential customers to switch suppliers seem tohave caught many competitors by surprise.
Along with a free burger and a Coke at any one of the numerouscookouts Scana is holding around the state during the month ofOctober, the company is offering residential customers $50 in thefirst month they switch, with no obligation to sign a long-termcontract. And if you’re lucky enough to win the raffle drawing,Scana will set up a new Broilmaster gas grill on your sun deck.
Scana’s marketing department said the generous up-front offersare accompanied by a modest decrease in gas rates: 0.4427cents/therm or nearly 1.5% less than AGL’s current commodity rateof 0.449 cents. Scana also plans to offer other services, includingphone, power, home security and Internet service, at a later date.
Earlier this week, 19 marketers, including Scana, were certifiedto begin advertising to Atlanta Gas Light’s 1.4 million customers.Georgia kicks off retail competition Nov. 1. So far, no one elsehas been willing to take such large risks on an aggressive initialmarketing program.
“It’s a damn joke,” Brent Phelts said of Scana’s $50 checkoffer. Phelts is owner of one of the smaller marketing firmsparticipating, Phelts Natural Gas Associates, and is a partner inValdosta Natural Gas Services, another small firm that will focussolely on the Valdosta supply pool. “Those are the kind of gimmicksI would tell people to avoid,” said Phelts. “I tell people I’lloffer them the lowest price possible. I promise to get the gas tothem at cost.
“I think that’s not really $50. I’d want to see it happen beforeI sign. I mean there’s nobody that can sell gas to residentialcustomers and give them $50 without making that $50 back somehow orover sometime,” he said in disbelief. “They’ve already claimed theydon’t have to have a contract. You can see the potential formisleading information. If Scana really is offering that I’llassign my customers to them.”
Scana could be sticking its neck out too far because without acontract customers could jump ship, Phelts noted. Phelts plans tooffer residential customers three simple rate packages: a flat ratewith a rebate at the end of the year, a long-term fixed priceagreement tied to the futures market and a floating price tied tothe spot market.
But Phelts said he expects most marketers to focus on commercialand industrial customers until the 33% threshold is reached in oneof the nine AGL supply pools and the remaining residentialcustomers in the pool are randomly assigned to marketers. “On Nov.1, I don’t think anyone is going to be prepared to handle theresidential market. There are some logistical problems. You have tomake sure the EBB interfaces work. You have to have all thecustomer information, which isn’t out yet. You have to see how it’sgoing to be priced.”
Gainesville, FL-based Infinite Energy said it will be sellinggas to all firm customers but will focus on commercial andindustrial customers. “We don’t plan to try to buy customers [likeScana is doing]. We’re going to be in it for the long haul,” saidVincent Vesuvio, Georgia operations director. “Certainly we’regoing to be matching those 5-10% savings that customers are goingto expect to be seeing. We’ll be offering them a competitivediscount. But our focus is not going to be residential. Maybe youcould say we’re more reactive than proactive on the residentialside, but we’re very proactive on our key [large] accounts.”
Rebecca Killough, senior energy services representative at NorAmEnergy Management said NorAm also isn’t going to “pour millions ofdollars” in advertising into the market to go after residentialcustomers either because “we really don’t feel that the return oninvestment is there.”
NorAm wasn’t willing to provide details about what it plans tooffer customers. “We really can’t say that much right now aboutspecific price [offers] and pricing models. We feel like ourpricing is going to be extremely competitive.”
NorAm is in the process of forming a Georgia partnership withPanCanadian Energy Services. According to the agreement,PanCanadian would act as the industrial supply end, while NorAmwould serve any residential or commercial customers to twocompanies sign up. Several other retail partnerships have beenformed, including South Star Energy Services, a partnership ofPiedmont Natural Gas, Dynegy and AGL affiliate Georgia Natural Gas,and Scana has joined Cobb, Snapping Shoals and Central Georgiaelectric cooperatives in a retail marketing arrangement.
Few of the 19 marketing firms have formed marketing strategies,however. Some plan to wait a few months to better prepare and getsome idea of what they’re up against. Sempra Energy subsidiaryEnergy America won’t participate until after Jan.1. And aspokeswoman for Florida Power & Light unit FPL Energy Servicessaid it was “premature” to even discuss whether FPL would beparticipating. “We’re still evaluating our plans,” said FPL’sJanice Brady. “That’s all I can say about it right now.”
An FPL marketer said the company may eventually serve a selectgroup of commercial and industrial customers but currently isn’tprepared to participate. “At the present time, we have no plans toprovide residential services,” he said.
Columbia Energy Services said it would be active in all sectorsof the retail market but it’s still crafting its marketing strategyand devising its rate packages. Most marketers are waiting for AGLand the PSC to release customer data before they design their rateofferings. The Georgia Public Service Commission plans to reviewsome of the privacy issues involved in the release of customer dataon Friday. It may decide to allow customers to have the option ofremoving their information from the database. AGL is obligated toprovide marketers with the database on compact disc by Oct. 22.
©Copyright 1998 Intelligence Press Inc. All rights reserved. Thepreceding news report may not be republished or redistributed, inwhole or in part, in any form, without prior written consent ofIntelligence Press,Inc.
© 2023 Natural Gas Intelligence. All rights reserved.
ISSN © 1532-1231 | ISSN © 2577-9877 |