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The Competitive Environment
APPA Management and Leadership Workshop
October 2, 2006
Larry KoshireRochester Public Utilities
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Today’s World
•“We Live In Interesting Times”(Old Chinese Proverb)
•Is “Competition” Today’s Model for the Electric Industry?
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Where has the Industry Been?
• Energy Policy Act of 1992• FERC Order 888 (non-discriminatory
Access)• FERC Order 2000 (Advocate Creation
of RTO’s)• EPACT 2005 (PURPA revisions,
Reliability)• How do we define “Competition”?
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Today’s Electric Market
• Wholesale experiences
• Retail Choice (a few states, Municipals can opt in)
• The re-regulation of the Industry and impacts on “non-regulated” entities such as Coops and Munis
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Have You Been Audited Lately?
• Y2K Compliance and DOE oversight• New York and 9/11 impacts on Utilities• TSA/NERC terrorist alerts• Reliability Legislation and EPACT 2005• State Energy legislation and Reliability
Rules• Now “NIMS” !
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Impacts of Retail Competition on Munis
• Some States Allowed Retail Choice.• If not choice, new regulations applied
to Municipals.• Minnesota debate included reliability,
REO, and customer rules.• RPU’s customers and established IOU
relationships.• California 2000-2001- Do we prepare
for Choice?
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One Utility’s Approach to Electric Competition
• Survey of Utility’s identity.• Media Market domination by IOU’s and
Coops.• IOU’s servicing Retail Customers.• Needed a decision and actions to face
coming retail choice.
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Energy mega brands are using service, pricing, and sophisticated advertising and marketing campaigns to change consumer expectations of the utility industry. As a result, consumers are demanding more from their utilities…better service, quality, innovation and price.
The Challenge
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Leverage the creativity and strength of a branded utility partnership to communicate the benefits of public power to the community (legislature), and provide partners “best-of-breed” service models, resources and marketing tools to equip utilities for effectively servicing their consumers.
The Solution
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Introducing
Enfinity Energy® is an organization that enables public utilities to partner to promote the benefits of public power through locally-owned servant-based utilities, and leverage shared experience and resources.
Our Approach
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Enfinity Energy® Partnership
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• Touchstone Membership Growth 600 cooperatives. 45 states. Collectively deliver power and energy solutions to more than 22 million customers.
• Touchstone Brand Strength – “highest customer satisfaction score in the electric utility industry” (American Customer Satisfaction Index, 2006 ).
The Model: Touchstone Energy®
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Energy cooperatives faced the same challenge years ago and partnered to form the successful Touchstone Energy Cooperatives.
The Model: Touchstone Energy®
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Branding and a Municipal Identity…Future Plan?
• Customers Get it…..Fellow Municipals Don’t.
• What do you think?
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The Future of Competition In the Electric Industry
• Are politicians done tinkering with the rules?
• Back to the Future the 70’s and 80’s return– New generation and transmission– Requirement for renewables– New technologies and the new wave of
employees– Rate pressure and environmental issues.
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Facing the Future Challenge
• Continued emphasis on the customer.
• Organizational culture change.
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Recommendations
1. Provide superior customer service.2. Deliver value through power supply
service.3. Focus on distribution performance
and opportunity.4. Put communities first.5. Optimize community infrastructure.
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Recommendations (cont.)
6. Lead in environmental stewardship.7. Build consensus through democratic
governance.8. Promote human resource excellence.9. Engage policymakers through
legislative advocacy.10. Invest in your technology future.
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Thank You!Questions???