Industrial Approaches to Reducing Energy Costs in a Restructuring Electric Industry

Abstract

Electric restructuring, currently proposed in California and being reviewed elsewhere, can produce many opportunities for large companies to reduce their electricity costs. As the electricity market changes, electric utilities and other potential suppliers are likely to develop a portfolio of options and creative pricing to attract customers in a competitive market. In attempting to be "energy neutral," i.e., to be indifferent to energy costs in one state or utility service area versus another, many companies are looking at a corporate approach to energy procurement, similar to the procurement of other products. Industrial customers may be looking for regional or even national energy suppliers for their facilities. Electric utilities, in an attempt to be competitive and retain customers, will likely work to be this regional or national energy supplier. The expectation will be that these suppliers can offer competitive pricing and a portfolio of options from which to choose. These options may resemble those that have developed in the natural gas market as a result of restructuring in the fuels industry.