Natural gas marketers might save a few pennies on each trade by doing their business online rather than over the phone, and they probably will handle more volume, but at some point in time it’s going to come back to haunt them, said Kevin Huntsman of Mastio & Company. Mastio just released its fifth customer satisfaction ranking of gas marketers, and the results are a little scary for many of the mega marketers, who boast about huge gas volumes but often have very few satisfied customers.

“If you take a look at the scores, the highest score with a mid-tier marketer is in the low 90s (with the best possible being 100). In the mega marketers, it’s the mid-70s. There’s at least a 14 point difference between the two groups,” said Huntsman. “That’s not to say that all the people in the mid-tier level excel like that, but out of the 20 or so mid-tier marketers, 50% plus score higher than the highest in the mega marketer group.”

A lot of the reason behind that is high-quality individual service, he said. “I’m not going to say that Enron or Coral or Reliant don’t do that with some customers, but they don’t do that with the majority of them. I think it’s because they are doing more online business; it’s cheaper. It costs a lot to put a guy on an airplane to go spend a week talking to folks. You can say ‘hey, if you are going to deal with us you have to do it on the computer.'”

But in the end Huntsman believes marketers either will revert back to better customer relations, or they won’t be around any longer. Mastio’s pool of companies already has been reduced to about 49, from 68 last year. Consolidation has cut back the ranks significantly and will continue to do so. Other companies have fallen by the wayside because of poor business practices.

Mastio ranks the marketing companies based on the results of interviews with industrial customers, local distribution company customers, power generators, producers and other marketer customers. Each respondent rated marketers on 24 customer satisfaction attributes, including quality of relationships, attitude of continuous improvement, energy management services, risk management products and services, sales representatives who listen well, plus overall preference and performance.

The top 20 mega marketers ranked by the level customer satisfaction fell in line as follows: TXU Energy Trading came in first place followed by Conoco, Reliant, Mirant, Entergy-Koch Trading, Oneok, BP, CMS, Aquila, Coral, El Paso, AEP, Enron, Dynegy, Duke, Williams, Sempra, PanCanadian, Texaco and ExxonMobil (No. 20).

When comparing this year’s study to last year’s, 27 marketers improved their index scores, while 22 declined. The index is based on a 100-point scale with 30.65 points separating the highest and lowest performers. Among the mega marketers, Oneok, Reliant and CMS had the highest three-year average. ExxonMobil, Sempra, Texaco and Dynegy had the lowest two-year average. Entergy-Koch Trading, TXU, Coral and BP showed the greatest improvement, while Enron showed the most significant decline.

The companies that did poorly in customer satisfaction, appear to be those most focused on online business. “With Enron, it’s kind of a double edged sword. In the last study, Enron did real well because of, I think, the influence of EnronOnline, the popularity of it,” said Huntsman. “And then, I don’t know if they became so dependent on EnronOnline, or they then neglected customers.”

The most important issue according to natural gas customers is reliability of supply, which is probably no surprise. TXU Energy Trading, which came out on top of the mega marketer ranking this year, also was rated the highest in reliability of supply in the group.

“At all costs they should avoid a disruption of service, poor reliability of supply,” said Huntsman. “But one of the biggest underlying issues we find is that so many customers want a relationship. You have EnronOnline that really caters to the person who wants to make a quick deal. But we look at this information statistically with correlation coefficients, and we look at issues that the companies with the highest performance are concerned about and excel at. Time after time the main issue is relationship and quality of relationship. Those companies with the representatives who listen well get high marks. Anybody that doesn’t have representatives, people that are out there interfacing with the customers, representatives that have good people skills and are easy to work with and accessible, those are the ones that could be in store for a downfall.”

The companies that excel in customer satisfaction are some of the smaller marketers. “Some of the mid-tier guys like Woodward [Marketing], WPS and ProLiance, they are out there interacting with their customers on a regular basis. They don’t have the capital wherewithal to have a big online service, so they excel by interacting with the customer and they do well in our studies because of that.”

Among the mid-tier marketers, WPS Energy Services, Woodward Marketing and Texican Natural Gas had the highest three-year average. Dominion had the lowest two year-average. Those showing the greatest improvement include Occidental, Burlington and Noble Gas, while Husky Oil showed the most significant decline.

The top 20 include the following: WPS (No. 1), Woodward, Texican, Noble, Occidental, Prior Energy, Amerada Hess, Burlington Resources, ProLiance, Cinergy, Tenaska, U.S. Energy Services, Anadarko, OGE, Husky Oil, PG&E, Marathon, Dominion, Equitable and AEC Oil & Gas (No. 20).

“If you feel you are being ignored, you are probably right,” said Bart Thedinger, senior partner at Mastio, because many gas marketers still treat their customers as replaceable and nothing special.

If you come to work to execute your trades over EnronOnline, IntercontinentalExchange or DynegyDirect and then go home, it may be a good time for a small change in business strategy. “If your lines go down and you don’t have a person to handle your business over the phone, you’ve just lost all that extra money you’ve saved” through online sales, said Huntsman.

“It’s a double-edged sword,” said Huntsman. “You have to find that middle ground. A lot of it is understanding the type of customer that you have. If that customer doesn’t have a problem working with you over the Internet, you let them run with it. But you can’t force a square peg into a round hole. I think a lot of these LDCs and industrials have been in the business a long time and have become accustomed to dealing with an individual, and want to be able to pick up the phone and talk to someone.”

©Copyright 2001 Intelligence Press Inc. Allrights reserved. The preceding news report may not be republishedor redistributed, in whole or in part, in any form, without priorwritten consent of Intelligence Press, Inc.