Power companies dangle free nights and weekends

By Jonathan Fahey

Associated Press

Published: Friday, Aug. 16 2013 12:08 p.m. MDT

"It's not like an entertainment purchase where you can see the reward," says Bruce Stewart, chief marketing officer for Constellation Energy, the retail arm of Exelon Corp.

U.S. power prices have been mostly flat or declining since the mid-1980s, adjusted for inflation. A typical residential customer spends $110 per month on electricity. That's one-third the average amount spent by a family on gasoline.

Power providers have only had success attracting customers in the past when electricity prices are falling sharply because they can offer a quick, obvious savings compared with what the traditional utility offers. But now that 60 million customers have digital meters, they can offer plans that help customers save money based on how and when they use power, not just with a cheaper price.

Direct Energy ran a simple, silly TV advertisement pitching its free power day that included a woman blow-drying her golden retriever — why not, if the power is free? Oklahoma Gas & Electric offers a plan called "SmartHours" that offers lower rates to customers who cut back on power usage during hot summer afternoons, along with a thermostat that can adjust itself based on electricity prices.

"To differentiate yourself you have to craft a product that makes things easier," says Bill Massey, a former federal energy regulator now at the Compete Coalition, a group that lobbies to expand competitive electricity markets.

Companies are offering pre-paid electric plans that, like pre-paid mobile phone plans, can be cheap and include no sign-up fees or deposits. Customers get text and email alerts when they've used most of the electricity they've paid for. By paying attention to their use they use less, which lowers their bills further. Prepaid customers can have their power cut more quickly, though, if they have trouble paying for more electricity. In Texas, for example, if a prepaid balance falls below a certain level, power can be cut in as little as a day after the power provider issues a warning.

"Some (new plans) will be good for some people and some will be very very bad for other people," cautions Janee Briesemeister, a senior legislative strategist who works on electricity issues for the AARP.

This week New York's electricity regulator threatened to block a power provider called Buy Energy Direct from operating in the state over complaints that it signed up customers who never intended to sign up, a scheme called "slamming."

"It's even more confusing than shopping for a cellphone contract," says Briesemeister.

Many in the industry think that companies will learn to offer ever more straightforward and useful plans in order to woo and keep customers, and customers will learn to shop for electricity the way they shop for phone or cable service.

"The industry is only at the beginning of learning to understand their customers and figuring out what people want to do," says Brain Seal of the Electric Power Research Institute, an industry-funded technical group.

Find Jonathan Fahey on Twitter at http://twitter.com/JonathanFahey .

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