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EDITORIAL

Home Energy Magazine Online March/April 1998

EDITORIAL

The Other Side of the Meter

Home Energy traditionally reports on innovations on the customer side of the meter--how customers use and conserve energy. We generally ignore events on the utility side--that complex organization which generates, transmits, and distributes energy to homes. From a corporate perspective, change in the utilities has occurred at a glacial pace; the same utilities have been providing customers with energy for more than 50 years. Of course, each company structure is unique, and these differences have caused utilities to pursue different strategies on the demand side, ranging from vigorously pursuing conservation to aggressively selling electricity, but their fundamental operations are all the same. Now, however, that cozy world is changing, and the repercussions will be felt even on the customer side of the meter.

Massachusetts, Pennsylvania, and Rhode Island now allow "retail energy suppliers" to sell consumers electricity and gas. The theory goes that competition among suppliers will lower the price of energy and give rise to new services. Curiously, one of the first changes to appear has been the opportunity for customers to buy green power, electricity generated from renewable energy sources. This electricity may actually be more expensive than that generated from fossil fuels. Other retail energy suppliers offer special tariff structures that include low-priced off-peak power. We won't be surprised if still other companies offer toasters and frequent flyer miles to attract new customers and heavy users.

Another way in which these unregulated suppliers can distinguish themselves from the others is by offering energy-related services as well as energy. In the future these services could range from simple items like more informative energy bills to installing and maintaining energy-related equipment and providing energy audits. Other, unrelated services, such as fire or theft security, are already appearing.

These side businesses could become an important revenue source--in some cases, they could generate more revenue than the electricity or gas bills. This suggests that there may be greater profits available by selling the services than by selling the energy. Indeed, a company might sell electricity at no profit simply to gain access to the much larger services and security market.

If this logic is correct, then we can expect all sorts of new partnerships to form between electricity suppliers and service providers (partnerships which, in the past, were prevented by monopoly laws). Soon the firms that maintain the heat pump, check the security system, and perhaps even install insulation may be subsidiaries of the electricity providers. We may be looking at a new pattern of energy-efficient services, and new opportunities for everyone who has been working on energy-saving products and services.

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