Supply management: The next competitive advantage for utilities
Abstract
Almost three-quarters of the cost of operating a typical utility is attributable to supply management activities - planning, acquisition, handling, disposition, and payment for materials, services, and fuel. Reducing their costs can substantially improve one`s competitive position. Three performance indicators will be paramount in determining which utilities survive and prosper: (1) Price. Energy is a commodity. As such, the principal driver of market penetration in the new era of wholesale and retail wheeling will be price. Therefore, the determinant of success will be the ability to provide products and services to the marketplace at the lowest possible price. (2) Service quality. Beyond price, the most meaningful differentiation among energy delivery companies is in the perceived quality of services provided. Customer service and reliability will be the key means by which a provider differentiates itself, positively or negatively, from the competition. (3) Earnings growth. With the application of incentive regulation, earnings will be governed by a company`s ability to compete successfully in the market. This will place extreme pressure on utilities to enhance revenues - which is difficult in a mature market - and/or to reduce costs through productivity gains and process changes.
- Authors:
- Publication Date:
- OSTI Identifier:
- 447685
- Resource Type:
- Journal Article
- Journal Name:
- Electricity Journal
- Additional Journal Information:
- Journal Volume: 9; Journal Issue: 7; Other Information: PBD: Aug-Sep 1996
- Country of Publication:
- United States
- Language:
- English
- Subject:
- 29 ENERGY PLANNING AND POLICY; ELECTRIC UTILITIES; COMPETITION; MANAGEMENT; SUPPLY AND DEMAND; DEREGULATION; BUSINESS
Citation Formats
Budd, S, and Heard, F. Supply management: The next competitive advantage for utilities. United States: N. p., 1996.
Web. doi:10.1016/S1040-6190(96)80286-7.
Budd, S, & Heard, F. Supply management: The next competitive advantage for utilities. United States. https://doi.org/10.1016/S1040-6190(96)80286-7
Budd, S, and Heard, F. 1996.
"Supply management: The next competitive advantage for utilities". United States. https://doi.org/10.1016/S1040-6190(96)80286-7.
@article{osti_447685,
title = {Supply management: The next competitive advantage for utilities},
author = {Budd, S and Heard, F},
abstractNote = {Almost three-quarters of the cost of operating a typical utility is attributable to supply management activities - planning, acquisition, handling, disposition, and payment for materials, services, and fuel. Reducing their costs can substantially improve one`s competitive position. Three performance indicators will be paramount in determining which utilities survive and prosper: (1) Price. Energy is a commodity. As such, the principal driver of market penetration in the new era of wholesale and retail wheeling will be price. Therefore, the determinant of success will be the ability to provide products and services to the marketplace at the lowest possible price. (2) Service quality. Beyond price, the most meaningful differentiation among energy delivery companies is in the perceived quality of services provided. Customer service and reliability will be the key means by which a provider differentiates itself, positively or negatively, from the competition. (3) Earnings growth. With the application of incentive regulation, earnings will be governed by a company`s ability to compete successfully in the market. This will place extreme pressure on utilities to enhance revenues - which is difficult in a mature market - and/or to reduce costs through productivity gains and process changes.},
doi = {10.1016/S1040-6190(96)80286-7},
url = {https://www.osti.gov/biblio/447685},
journal = {Electricity Journal},
number = 7,
volume = 9,
place = {United States},
year = {Thu Aug 01 00:00:00 EDT 1996},
month = {Thu Aug 01 00:00:00 EDT 1996}
}