Large U.S. businesses intrigued with initial concept of adjustable rate power contracts

NORTH SALEM, NY, June 5, 2003 — In the midst of volatile energy markets, could utilities and marketers successfully offer an “adjustable rate” power contract to their largest commercial and industrial customers to protect against wide swings in commodity prices?

A new exploratory study by RKS Research & Consulting confirms that key accounts are intrigued with the concept. Indeed, a sizeable portion of these businesses say they would be willing to participate in pilot programs to test the idea against the realities of weather, price fluctuations, and delivery constraints.

Further, the survey shows that the greatest interest comes from the largest and most active key accounts–for example, businesses with large employee populations, high monthly electric bills, and active energy conservation programs. In addition, three quarters of respondents remain open to the idea and encourage the development of more detailed adjustable or variable rate designs by their suppliers, according to the pilot survey.

At the same time, the pilot survey finds that energy suppliers will need to consider the views of these large customers with care if they want to market alternative rates successfully. In an important finding, key accounts say they need to see bottom line savings or increased electric reliability from any new offering, according to the survey. These same large businesses also express resistance to a premium or additional fees in exchange for a “locked-in” rate.

These findings are part of a special RKS mini-survey of 50 key accounts representing a nationwide sample of commercial and industrial organizations. The survey asked senior officers and energy managers of participating firms to assess the idea of “adjustable” electric rates, similar in design to variable contracts in effect in banking, home lending, and insurance.

The final exploratory report contains an analysis of overall findings, measures interest by customer segment, and includes verbatim responses to questions in the areas of information needs, contract provisions, and expected customer benefits. This RKS mini-survey is available for direct purchase from the company’s website: www.rksresearch.com or by calling (914) 277-6900, ext. 101.

Now in its 29th year of business, RKS Research & Consulting designs and conducts both syndicated and customized market research and public opinion polling for energy and natural resources clients, including their major associations. RKS operates from headquarters in North Salem, NY, plus field offices in New Jersey, Florida, Ohio, and California. Further information is available at www.rksresearch.com.