Dashed Hopes: U.S. Businesses Disappointed in Savings & Service From Changing Electricity Suppliers, Says Nationwide Survey.

Business Editors/Energy Writers

SANTA CLARA, Calif.--(BUSINESS WIRE)--Aug. 22, 2000

Latest RKS Customer Study Finds Highest Satisfaction Levels in

Regulated Markets; Key Account Shopping, Interest in "Premium"

Energy Services on the Increase

American businesses that switched their energy suppliers for lower electricity prices are measurably less satisfied than companies that stuck with their current provider, says a major new national survey.

Indeed, U.S. companies staying with their current provider are not only more satisfied with their present utility, but also give their supplier higher marks on all major dimensions of performance, from cost savings and customer service to billing and usage information. In contrast, businesses that changed suppliers for price reductions express the lowest level of satisfaction with all performance levels beyond costs.

And although they acknowledge lower costs, these same businesses are still disappointed in the magnitude of the savings, according to the survey.

Key accounts -- larger firms with multiple sites and monthly electric bills in excess of $2 million -- are shopping for savings and switching electricity suppliers much more than businesses in general, the survey notes. But only a third of these switchers give their new supplier high marks, and three quarters of these larger firms will give their incumbent supplier an opportunity to meet or beat competitive bids.

The same survey finds increasing interest among U.S. businesses in "premium" power -- clean, uninterrupted energy to run sensitive equipment -- as well as additional services in such areas as equipment upgrades, real-time monitoring, and on-site generation. While business customers express high degrees of satisfaction with power delivery, they remain concerned about outages. For example, key accounts place the average cost of a one-hour outage at nearly $300,000. And the survey finds a direct link between power reliability satisfaction and shopping for a new supplier.

These results are part of the Midyear National Business Customer Assessment conducted by RKS Research & Consulting, a nationwide market research and public opinion polling organization. Between the end of May and mid-June, RKS conducted telephone interviews with 1,021 U.S. businesses, plus 402 key accounts. Results are now being reported to sponsoring utilities and energy marketing firms.

According to the RKS findings, one in five American businesses can now choose their electric supplier. Within that 20 percent base, seven in 10 companies have elected to stick with their present provider; only one in 10 chose a new supplier.

Among the larger key accounts, one in four have a choice of suppliers, and the RKS research demonstrates that shopping and switching are on the increase. Indeed, just over half -- 56 percent -- of these companies have retained their present energy supplier, compared with 71 percent of U.S. businesses. Among the key accounts with choice, one out of five picked a new supplier unaffiliated with the local utility.

While the businesses that switched realized lower electric costs, the actual savings fell far short of their expectations, according to the RKS study. Meanwhile, the firms that stayed put were pleasantly surprised by the comparison of their costs to regulated tariffs. The bottom line: on a 1(poor)-7(excellent) satisfaction scale, non-switchers are significantly more positive about their supplier, by a margin of 1.2 points (5.74 for those that stayed vs. 4.56 for switchers).

In an important sign of loyalty, three out of four key accounts say they will give their current electric supplier an opportunity to meet or beat competitive bids.

"Switching suppliers doesn't always deliver improvements," said Carmine Grastataro, RKS senior vice president in charge of this survey. "For instance, only a third -- 33 percent -- of key accounts are satisfied with their new supplier, compared to the 58 percent satisfaction level among companies that stayed with the incumbent provider. While the switchers acknowledge lower prices, they also report extra work and billing issues with their new supplier."

Despite widespread concerns about power delivery, business customers give utilities high marks for reliability -- 6.1 on a 1(poor) to 7 (excellent) scale. At the same time, half of the U.S. businesses surveyed say they would switch suppliers over excessive outages or fluctuations as a means of registering their dissatisfaction with power delivery problems. And key accounts that switched suppliers are less satisfied with power delivery than those that stayed with their incumbent provider.

"Businesses are evaluating on-site generation to alleviate power delivery concerns and address potential capacity shortages," said Grastataro. "The energy crisis in California, coupled with disappointment over competitive electric prices, have helped businesses focus on value-added information and energy services. For these businesses, competition is not just about price. It's about finding the total solutions package that delivers the ultimate in value."

Results from the latest RKS National Business Customer Assessment are now being shared with sponsoring organizations. Copies of the full report and data sets are available for sale through Joan Eckels at RKS in North Salem, NY at 914/277-6900, ext. 102, or on the Internet at: www.rksresearch.com.

Now in its 27th year, RKS Research & Consulting develops and conducts market research and public opinion polling for energy and natural resource organizations and their major associations. The firm has headquarters in North Salem, NY, plus field offices in New Jersey, Florida, California and Sweden.