Primen Study Suggests Business Attitudes Change in Power Crisis

The recent energy crisis in California may prompt companies to increase their use of reliable on-site generation, and the high costs may also generate resentment against the energy system as a whole, according to a recent study in that state.

MADISON, Wisconsin, US, 2001-09-18 [] Blackouts and soaring prices have motivated many businesses to make a variety of changes to both their daily operations and their physical plants in the hopes of lowering their energy bills and avoiding downtime from outages, says Primen. The Wisconsin firm surveyed 400 California businesses during March and April to examine rolling blackouts in northern California, but it also surveyed companies in southern California to obtain a clear comparison. The study is part of Primen’s Customer Insights series, which takes an in-depth look at energy customer attitudes and behaviors. The study found that three-quarters of California businesses have taken steps to reduce their electricity consumption, while one in five have installed more energy efficient equipment as a direct result of recent events in the state’s energy market. In northern California, which bore the brunt of blackouts, 10 percent of companies have purchased additional backup power generators as a result of the crisis, and 27 percent are likely to purchase backup generation in the next two years. Across the state, 18 percent of businesses are likely to acquire a broader on-site generation solution that would supply most or all of their power needs within the next two years, the study found. The energy crisis is also beginning to have a substantial effect on how businesses feel about their energy suppliers. While satisfaction levels remain relatively high, the survey shows attitudes have eroded, with 27 percent of those who experienced an outage saying they were dissatisfied and willing to switch to alternative suppliers. “At this point, the energy crisis in California is having a dual effect: prompting customers to find their own solutions to the problems of unreliability and high costs while souring their attitudes toward the energy system as a whole,” explains David Lineweber of Primen. “Clearly one of the most significant results from California’s energy crisis may be the growing ‘crisis in confidence’ within the business community about the dependability of their energy providers. We were especially surprised by the high levels of distrust and skepticism — even cynicism — within the business community about the crisis itself.” While most businesses say the energy crisis has prompted them to reduce power consumption, the study suggests they may be doing so begrudgingly. Only one in four of the same businesses feel strongly that conservation measures are part of the solution to the energy crisis. Businesses that experienced outage costs are the least likely to agree that conservation is part of the solution. Almost half of California businesses attribute the problems to price gouging and market manipulation, and 49 percent feel strongly that California should never have deregulated the electric power industry. “It is clear that California businesses feel stung by the energy crisis, and they’re ready to take steps to protect their facilities from the annoyance of frequent power outage warnings or actual events,” explains Lineweber. “Consequently, they will continue to seek out technology solutions and alternative energy suppliers. In other words, California’s energy crisis may have the strange and ironic consequence of making the business community more receptive to competition-even though the jury’s still out on whether power marketers will be able to compete profitably for that business.” Primen is an independent energy market intelligence company.
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