Competitive positioning
Journal Article
·
· Fortnightly; (United States)
OSTI ID:7081327
Changes in the utility industry are making established utility-customer relationships more vulnerable to competitors. Recent competitive forays into electric wholesale markets illustrate what's in store for utilities as customers gain more freedom of choice. For 40 years, the Borough of Butler's 19-megawatt load had been served by Jersey Central Power Light (a General Public Utilities [GPU] subsidiary). Following passage of the Energy Policy Act of 1992, the New Jersey Borough asked neighboring utility Public Service Electric Gas Co. (PSE G) to bid on its business. Just as Butler tentatively decided to sign a new contract with PSE G, other utilities joined the fray and began bidding the price down. When the dust settled, Jersey Central was given one year's cancellation notice and Butler signed a new contract with Pennsylvania Electric (another GPU subsidiary) for a 40-percent cost savings. Jersey Central's problems didn't stop there. The utility's four other municipal customers were also approached by neighboring utilities; in each case, Jersey Central lost their business (although it ultimately remained within the GPU system). The basis for success within the utility industry is shifting from operations reliability to competitive positioning. The new success model requires utilities to be market-driven, produce customer value, provide competitive versus justifiable pricing, focus more on cost productivity than on costs in rate base, and increasingly look toward forging partnerships with others. Those utilities able to successfully implement the new success model first will secure defensive and offensive competitive positions that will enable them to capitalize on changes in regulation.
- OSTI ID:
- 7081327
- Journal Information:
- Fortnightly; (United States), Journal Name: Fortnightly; (United States) Vol. 132:13; ISSN FRTNE8
- Country of Publication:
- United States
- Language:
- English
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