After all, allowing companies to compete in the open market in selling their energy seems like a good thing…doesn’t it? Before we answer that, let me share with you a few thoughts that might help shed some light (no charge for this light however ! ) in assessing how “great” things might be for all of us.

(1) According to the Edison Electric Institute’s July 2007 rate comparison study, the average residential rate per Kilowatt-hour in the US is 12.4 cents

There are well over 150 companies in the USA who provide power at rates that range from 6 cents to nearly 24 cents.      Well below the average are companies like Dominion Virginia Power, PPL Electric Utilities, Met Ed, Duquesne, and Ohio Edison Co, who price their power between 6 cents and 12 cents (many under ‘regulation”), whereas companies like Con Ed , Jersey Central, BG&E, PECO Energy, and Pike County Light and Power Company, price their product between 14 and 23.6 cents. Deregulation means allowing companies to raise their prices, based on what costs they incur in buying or generating power. (Some companies do both, they both generate power as well as buy power on the open market from enterprises who generate more than they consume)

So the first comment…deregulation can mean significantly higher prices to the consumer. ( i.e, PPL Electric Utilities who serves over 1.4 Million customers in Pennsylvania, have notified their customers that prices will rise at least 34.5% in 2009 when they are allowed by the courts to re-price due to deregulation.

(2) Many companies in this market, serve their customers through call centers.  A customer calls up their local Gas, Water, Light, Power, or Electric company  on the phone, and one talks to a customer service agent. In the old days, you could actually walk into your local office, and across a counter you spoke to that same customer service representative. In some geographies today, that local office still exists. But that is mostly an artifact that has fallen by the wayside in the tough era of the 80’s and 90’s due to cost cutting. Today there are different ways to communicate with your Utility company. You hit buttons on your phone speaking to an IVR (automated response )phone system, or you go to a self-service web site, and alternatively you can email your request or questions to your local Utility. . “Why would anyone want to communicate with their Utility company?” you might ask. In a recent study, it was estimated that 40% of the inquiries were credit related, 20% were to take orders for disconnects or service starts, 20% were for order inquiry or bill paying, and 10% were for emergency related issues reporting. Many companies have now automated these activities through self service web sites so that you can arrange for these activities without ever talking to anyone. (Now you might begin to see how the IT industry might be affected by deregulation ! Think…. portals!)

The best companies in North America for these web services, says E source (a company who rates utility web sites) are PG& E, Florida P&L, Wisconsin Public Service, NW Natural, Progress Energy of the Carolinas, Arizona Public Service, BC Hydro, Alabama Power, Austin Energy, and SD Gas and Electric. E source also says the worst web sites of the 100+ they rated were Atlantic City Electric, Columbia Gas of Ohio, Piedmont Natural Gas, Oklahoma Natural Gas, Kansas Gas Service, ENMAX, Texas Gas Service, Roseville Electric, Philadelphia Gas Works, and Dayton Power and Light.

(3) Many Utilities are buying power now, for the 2010 calendar year. Buying spot power for the immediate need is often a very expensive endeavor, so planning for seasonal averages and managing through peaks (and valleys) is a long range strategic planning activity. ISO’s exist to address some of these peaks and valleys, but one thing to be aware of, conservation and the use of alternative green energy sources will be with us for many decades to come. In Arizona, the Salt River Project (SRP) reports that residential consumers who purchase their power through in-store kiosks, and then transfer the purchased credits to an in-home metering system, conserve on average 22% less power than other residential users who use whatever power they consume, and then are billed at the end of the month. Users who are aware of their consumption judiciously conserve more than their counterparts says SRP.

(4) Historically, utility companies, like banks, and hospitals, and even newspapers, never seemed to go out of business. After all, they had a captive customer base, a cost-plus pricing entitlement, and an infrastructure with no threat or competition. Today, as the era of deregulation creeps towards us, expect industry consolidation, more self-service web sites, consumer choice with the ability to buy power from a variety of sources at varying prices, from hydro, nuclear, wind, solar, and others, and also expect that you just might want to check into many of the following functions with respect to your home residential power consumption. (all online, of course)

• Pricing options

• Payment and billing options

• Energy saving tips: with access to green suppliers

• Customer feedback to the utility

• Email customer service

• Outage reporting

• Appointment scheduling and status

• Disconnects/ turn-ons

• Work order status

• Moving

• Vacation

• Gas leak-pilot light turn ons

• Account balance

• Account history

• One-time payments

• Auto-pay

• Payment extensions

• Payment arrangements

(5) Also expect innovation in response to deregulation from your utility company too, in these areas

(a) automating meter reading systems to lower the costs of capturing consumption

(b) developing predictive maintenance systems to lower the costs for field service

(c) developing customer loyalty programs and campaigns (i.e. frequent flyer type offerings)

                                      or energy savers

(d) new services that broaden the offerings by the utility (i.e. similar to the ATT strategy

                                                  of broadening home services wider than just residential long distance)

In summary, several things are certainly clear: Prices will rise, IT web services will enable innovation

In the utility industry so that companies (that still remain) will stay competitive and differentiated,