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Title: Energy efficiency services: What role in a competitive environment?

Abstract

If experience from other industries counts, energy services will remain the strategically critical center of the chessboard in a reconfigured electric utility market. Players who can create customized, integrated packages of customer services will be in a strong position to {open_quotes}create value{close_quotes} in a highly fragmented and competitive industry. The initial phase of disintegration is likely to be followed by period of reintegration, in which non-price services become increasing important. An overview is given on how utilities can deliver value to customers through innovative marketing strategies, leveraging existing knowledge, and the maintaining or building of infrastructure.

Authors:
 [1]
  1. E Source, Boulder, CO (United States)
Publication Date:
OSTI Identifier:
171645
Resource Type:
Journal Article
Resource Relation:
Journal Name: Electricity Journal; Journal Volume: 7; Journal Issue: 9; Other Information: PBD: Nov 1994
Country of Publication:
United States
Language:
English
Subject:
29 ENERGY PLANNING AND POLICY; ELECTRIC POWER INDUSTRY; COMPETITION; DEREGULATION; PUBLIC RELATIONS; ENERGY EFFICIENCY; ENVIRONMENTAL EFFECTS; CONSUMER PROTECTION; PRICING REGULATIONS

Citation Formats

Newcomb, J. Energy efficiency services: What role in a competitive environment?. United States: N. p., 1994. Web. doi:10.1016/1040-6190(94)90100-7.
Newcomb, J. Energy efficiency services: What role in a competitive environment?. United States. doi:10.1016/1040-6190(94)90100-7.
Newcomb, J. 1994. "Energy efficiency services: What role in a competitive environment?". United States. doi:10.1016/1040-6190(94)90100-7.
@article{osti_171645,
title = {Energy efficiency services: What role in a competitive environment?},
author = {Newcomb, J.},
abstractNote = {If experience from other industries counts, energy services will remain the strategically critical center of the chessboard in a reconfigured electric utility market. Players who can create customized, integrated packages of customer services will be in a strong position to {open_quotes}create value{close_quotes} in a highly fragmented and competitive industry. The initial phase of disintegration is likely to be followed by period of reintegration, in which non-price services become increasing important. An overview is given on how utilities can deliver value to customers through innovative marketing strategies, leveraging existing knowledge, and the maintaining or building of infrastructure.},
doi = {10.1016/1040-6190(94)90100-7},
journal = {Electricity Journal},
number = 9,
volume = 7,
place = {United States},
year = 1994,
month =
}
  • The competitive restructuring of the electric power industry raises fundamental strategic questions about how energy efficiency services can best be delivered. While some utilities believe that the ``commoditization`` of electric power will extinguish their role in providing efficiency services, others are committed to developing new ways of profitably delivering highly integrated service packages in a more competitive environment. In other industries that have undergone similar transitions, leading companies have prospered by developing new ``reintegration`` strategies to provide enhanced customer value. In the electric power sector, these strategies will bring to the fore finance and marketing skills, giving rise to far-reachingmore » changes in the provision of energy services. Using market-based forward prices for electricity, power merchants may soon be able to ``monetize`` electricity savings and arbitrate against kilowatt-hour prices. Providers of efficiency services will be forced to develop new techniques for ``mass customization`` of service packages, incorporating features such as power quality management, innovative pricing, billing, and financial risk management. Technology integration will be a central task for these companies. As the transmission and distribution grid is permeated with real-time price information, the optimal technical solutions for the customer, including distributed generation, storage, and efficiency options, will become increasingly site-specific and time-dependent.« less
  • A review of world energy sources and supplies examines the economics of industrial applications as well as marketing strategies. Because of the abundance and pervasiveness of natural gas, the author concludes that it is both possible and desirable to decouple gas fr,m oil in the commercial markets. With new gas technology developments, gas can already compete with coal for central power production. As the technology improves, reserves that are currently uneconomical to develop will become available.
  • New York`s electric utilities sit on the high side of an awesome price gap, as compared with utilities in other regions. Since New York State and local governments share with the utilities themselves some responsibility for today`s high electric rates, a solution will not be found in one sweeping action, but in many small ones. The author focuses attention on some of the major utility cost factors that have been identified as responsible for driving up energy prices for utility customers. It will be demonstrated that in the short run, increases in utility customer bills in New York have beenmore » greatly impacted by mandatory DSM incentives to the utilities and, according to the utilities, overpayments to non-utility generators (NUGs). The utilities also have to share the blame for increases in electric prices to the extent they were responsible for the development of overpriced nuclear plants in the preceding decade. The author suggests how policy makers and regulators may go about reducing energy prices to customers, especially to large industrials, in order to keep them competitive.« less
  • The upstream (supply) extractive energy industries are being taken unawares by sweeping changes in the downstream (demand) realm beyond the flame tip. The future of energy gases (natural gas, hydrogen, gasified biomass, and so on) is inexorably linked to final energy demand, which, in turn, depends on trends in end-use energy efficiency and fuel substitution toward or away from gas. From economic and technical standpoints, increased energy efficiency is directly analogous to increased energy supply. In the years since the energy crises of the 1970's, increased energy efficiency has been the largest and least expensive source of new energy servicesmore » and has achieved more substantial reductions in energy-related pollution than offered by end-of-the-pipe strategies. A new generation of government and utility policies aimed at overcoming market failures - coupled with ongoing technological developments - promises continued dramatic expansion of the energy-efficiency marketplace. Another factor influencing the future of energy gases is increasing [open quotes]midstream[close quotes] competition on the supply side, including improved thermal efficiencies of electric power production and increased opportunities for substitution in the direct use of fuels. Renewable forms of energy (some of which are energy gases) are emerging as potentially important contributors to future electricity and fuel supply, and as formidable competitors with natural gas and other fossil fuels. The current direction of energy policy suggests a future energy system increasingly based upon a balanced mixture of investment in end-use efficiency, in renewable supply technologies, and in natural gas. Such a new system is usefully characterized by the unifying technical, economic, and policy-making paradigm known as integrated resource planning. 42 refs., 19 figs., 3 tabs.« less
  • Resource commitments for energy efficiency from electricity companies are disappearing rapidly as the regulated Integrated Resource Planning and Demand-Side Management paradigms that fostered them give way to competitive power markets in a restructuring electricity industry. While free-market advocates claim that energy efficiency needs will be taken care of by competitive energy service providers, there is no assurance that efficiency will compete effectively with the panoply of other energy-related (and non-energy-related) services that are beginning to appear in early market offerings. This paper reports the results of a feasibility study for a certification and brand identity program for energy efficiency gearedmore » to competitive power markets. Funded by the Energy Foundation, this study involved a survey and personal interviews with stakeholders, plus a workshop to further the discussion. Stakeholders include independent power marketers and energy service companies, utility affiliate power marketers and energy service companies, government agencies, trade associations, non-profit organizations, equipment manufacturers, and consultants. The paper summarizes the study's findings on such key issues as: Whether a brand identity concept has a critical mass of interest and support; how qualification and certification could work in such a program; how a brand identity could be positioned in the market; how an efficiency brand identity could co-brand with renewable power branding programs and other green marketing efforts; and the resources and components needed to make such a program work on a national scale.« less