Power Crisis Produces Opportunities for Utilities

The current energy crisis in the United States offers a unique opportunity for electric utilities to find customers who are interested in premium power.

LITTLE FALLS, New Jersey – “Interruptibility has become a hot issue for utility companies,” says Bill Downey of Kline & Company. “As more businesses move to interruptible contracts to save money, utilities need to identify customers who are willing to pay a premium for uninterrupted service.” Interruptible contracts have been offered by utilities for some time, but these contracts have gained attention recently due to rising energy prices and a need to decrease overall energy demand. Businesses have saved billions of dollars in reduced rates through interruptible contracts, and more will try to lower costs through such contracts as prices escalate, he explains. “Public utility commissions are searching for ways to reduce demand and are encouraging businesses to participate in interruptible contracts,” says Downey. The California Public Utility Commission, which is particularly concerned about electric service for this summer, recently ruled that the goal of utilities should be to retain existing interruptible customers as well as to attract new customers to the program. The market for premium power is untapped and shows significant potential as utilities struggle financially due to deregulation and the energy crisis, he adds. Savings to businesses under interruptible contracts are significant, with one estimate that a mid-sized manufacturer can save $55,000 a month on a pure interruptible contract. “This represents real savings to the manufacturer, but a significant loss of revenue for utilities,” says Downey. “Utilities can gain economic advantage by signing up those businesses that can require uninterrupted service and are willing to pay a premium. The key, however, is identifying them in an expeditious and cost-effective manner.” The need for utilities to gain an economic advantage will increase in importance as more states deregulate and the energy crisis worsens. Kline was established in 1959 to consult in the energy, chemical, consumer products and life sciences sectors.

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