Electric restructuring: Here comes the marketing

Vermont Business Magazine, Mar 01, 1997 by Ralston, Paul

During the current legislative session, the Vermont body politic will contemplate deregulation of electric utility industry. According to some analysts and futurists, deregulation will bring competition to the industry to the benefit of consumers. But whatever the changes, there's one outcome of deregulation we can be sure of: the onslaught of power marketing.

Think about it. A monopoly doesn't have to market its product to consumers. We don't buy power; we use it, then pay for it. If you want to use electricity, you either plug into the grid, or you generate it yourself. But if consumers have a choice of suppliers, then companies will have to turn consumers into customers, and they'll do it with marketing.

It's not that marketing, per se, is new to utilities. They've used marketing quite effectively to promote their business. For instance, a utility must market a rate increase to the Public Service Board; herbicide spraying programs must be marketed to environmentalists; even the Hydro-Quebec deal was a triumph of marketing. But with deregulation, residential and business customers will be the decision-makers, and utilities will be forced to 'lobby' them directly.

Consumers are used to utilities marketing themselves as 'good corporate citizens.' Some may even be familiar with recent efforts to promote 'demand-side management.' But, we suspect, the low-key approach of these campaigns will not be carried over to the frontier days of deregulation. After all, only a monopoly can to say to its customers, "please, don't use so much of our product."

With the break-up of monopolies, one company won't be able to sell all the power, so they will all try to sell more power to increase their market share. Companies will face the challenge of marketing a very perishable product, one with a shelf-life shorter than milk.

Purchasers, not used to making power decisions, may be overwhelmed with the new chore of choosing one supplier over another. To make things easier, utilities will use 'power-marketing,' to shift the focus to electricity as a branded product. The image of those brands will be all important, and companies will use marketing communications to reinforce their positions. Users will have to sort out any real benefits from the noise.

Here's some idea of what we can look forward to.

The 'environmental' position. Pure Power: Images of clear, cold mountain streams (picture beer ads), blue skies, and forests with wildlife. Sound Track: Uplifting classic music, running water, Canadian geese. Voice Over: "Power as pure as your imagination."

The 'neighbor' position. People Power Images of families at home, multi-cultural workplace scenes, Little League games (under the lights, aerial shots of you and your neighbors. Sound Track: Blue-grass music, crowd cheers, babies cooing. Voice Over: "The power of people."

The 'dependable' position. PermaPower Images of large. iron bridges; office buildings (lit up at night); automated assembly lines. Sound Track: Stirring rendition of a Broadway hit, Dow Jones news reports (the good news). Voice Over: "Power when you need it most."

There are other possible scenarios, of course, but we suspect the consumer benefit of this new competition will be somewhat less tangible than that provided by Penny Power ("All the power at half the price.") True, we respond to a bargain, but we have difficulty imagining a power-supply company marketing their electricity on price ("We'll beat any advertised price and refund you twice the difference.")

Soon after deregulation, we can expect the phones to ring and the mail to arrive offering us numerous opportunities to us "the power of choice." Soon after that, we can expect consultants to approach us with services for evaluating the mind-numbing alternative plans. Anyone could get into the business of selling power whether or not they own the generators.

We won't be surprised to hear from a phone company trying to sell "Power Phone"--"switch to our power and get your long distance calls free for a month."

Paul Ralstson takes his power off the grid in Bristol.