Electricity rivals wary as Calif. market set to reopen

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Although California regulators are scheduled to open the electric-utility market to competition March 31, marketers already anxious about the late start are wondering whether the state is really ready for deregulation.

"The real problem could be that for the sake of proving that they're doing something, they go ahead and rush the opening," said Sam Tornabene, director of communication services for Edison Electric Institute, an association of investor-owned utilities. "If it's not done right, people will get mad. And you can ruin a lot of the good that's been done by making people mad."


California originally had planned to open its market to competing electric companies on Jan. 1, but the date was pushed back because of unresolved problems in the state's central computer system.

Enron Corp. had launched an estimated $10 million campaign in the state last year, in anticipation of the January kickoff, but had to halt that effort. Now the energy company is not taking any chances.

"We've decided not to put [the campaign] back up until the market is up and running. We feel like we got burned last time," said an Enron spokesman. "Besides, no one else is out there in the market this time . . . so there's nothing to lose by waiting."

Although confirming that March 31 is the set date, a spokeswoman for the California Independent System Operator, the third party managing deregulated services, said: "It's kind of like a NASA launch. We expect everything to go fine, but we anticipate there will be problems."


"When you think about that, Enron spent millions and millions of dollars in the fall [and] now all those ad dollars are gone and wasted," said Mike Rucker, principal of utilities consultancy Second Opinion. "The issue is: Is anything happening on the marketing side other than people spending tons of money?"

Mr. Rucker's company is evaluating the California market and polling consumers to gauge acceptance and perception of deregulation. Preliminary results show that initial advertising and marketing efforts have had little impact, he said.

The number of consumers who have signed up to switch electric service is a paltry 30,000 out of the possible 10 million who have the option.

The biggest ad campaign--a state-mandated $90 million effort from DDB Needham Worldwide, Los Angeles--has been running since October and will end in May. The effort is paid for by the three largest investor-owned utilities in the state: Edison International, Enova Corp. and Pacific Gas & Electric. Each also had stepped up marketing crusades to garner customers.

More than 300 marketers have applied to offer deregulated electric service in California.


The delay "has held up the ability of the public to experience the benefits of deregulation and the effect of competition," said F. Lynn Blystone, president of Tri-Valley Corp., a dry natural gas provider that plans to offer some deregulated electric service in California. "It's like standing at the line for the Oklahoma land rush. All of us really want to see what deregulation is going to do."

Copyright March 1998, Crain Communications Inc.

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