More Power To The Utilities
Sydney Morning Herald
Monday August 9, 1999
High-tech online customer service will help accelerate consolidation in the deregulated power industry according to a study by BIS Shrapnel.
Power companies will have to use the Internet to develop closer relationships with consumers, even offering other related products and services via e-commerce.
BIS Shrapnel, in a study to be released today, predicts that within five years the 20-plus existing players in the industry will have been carved down to just five majors and a few smaller niche companies.
The business and consumer energy markets are being progressively deregulated across Australia. It is planned that all NSW and Victorian consumers will be able to choose their own energy suppliers by 2001.
BIS also predicts it will take little more than a year in a deregulated market for heavy price-based competition to push prices to a natural floor, after which the focus of competition will shift to buying customer loyalty through improved service.
The key to offering improved service without increasing costs will be the adoption of Web-based services on the Internet, allowing customers to pay bills online, manage off-peak power usage and even find approved third party equipment repairers.
Convergence across utility sectors could also mean customers are presented with a single online bill and self-management Web page, covering electricity, gas, water, telephone, home security and even financial services.
The BIS Shrapnel report was commissioned by business software company Oracle, which supplies customer relationship management computer systems.
Companies such as Oracle and IBM are predicting utilities will update to newer, more sophisticated computer systems to develop and maintain relationships with customers in a competitive environment.
The BIS report will be released at the National Power Conference in Melbourne.
BIS Shrapnel estimates that over 55 per cent of industrial and commercial energy customers the first to have access to the deregulated system have already changed suppliers, with the increased competition leading to price reductions of 15 per cent to 35 per cent.
Similar rates of ``churn" are expected when the consumer market the last phase of the deregulation process opens to competition from 2001.
``As soon as consumers have the notion of choice, you either have to create a barrier to entry to your competitors, or better yet, create some bond of loyalty to your existing customers," said Mr Chuck Sheridan, Oracle's group vice-president of utilities.
``In a commodity market, that's very difficult. There's no such thing as brand loyalty, based on the taste of the product an electron is an electron. It has to be based on the relationship with the supplier."
One way companies are already positioning themselves, according to the survey, is by becoming ``one-stop-shops" capable of providing everything from electricity to finance.
Oracle claims that intelligent use of e-business technology, allowing both customers and employees to service themselves efficiently, is crucial to pricing service in a deregulated market. The technology revolves around three key areas call centres, e-commerce and self-service via the Web.
By allowing customers to service their own billing and energy management via the Web, many more services can be offered, such as off-peak power usage and brokeraging of third-party services for consumer equipment repairs.
But Mr Sheridan predicts it won't go as far as power companies becoming involved in retail sales of white goods via the Internet. ``The margins aren't there there's no business case for it," he said.
© 1999 Sydney Morning Herald
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