Business Strategy and E-Commerce Spring 2000 Business to Business Electricity

1. Business Strategy and E-CommerceSpring 2000Business to BusinessElectricity Isnezawati Azali Chad Carter Connie Chen Emily Coyle Jawe Cheatum

2. The US Electricity Sector • The electricity sector is the nation's most capital intensive industry • Holds assets with a book value close to $700 billion in 1994 • Has total sales of $212 billion in 1996, larger than the telecommunications industry • Total government spending on electricity was $19.5 billion in 1995 Source: http://www.energyonline.com/Restructuring/models/white01.html

3. Major Players Across the United States • Pepco http://www.pepco.com/ • Edison http://www.sce.com/ • Alliant Energy http://www.alliantenergy.com/ • Duquesne Light http://www.duquesnelight.com/ • Mid American http://www.alliantenergy.com/ • The Southern Company http://www.southernco.com

4. B2B E-Commerce Strategy Model • Real time management inventory system • Online parts ordering • B2B online store • Daily online auctions and vendor contract bidding

5. Who are the Customers? • Agricultural • Office Buildings • Retail Stores • Restaurants • High Tech • Manufacturing • Hospitals & Medical Facilities • Hotels & Motels • Recreation/ • Entertainment • Warehouse • Cities & Counties • Federal & State Government • K - 12 School / Colleges

6. Strategies to Attract Customers • Participate in “Electric Choice” Program • Allow customers to choose electricity suppliers • Offer attractive combination of price and bundled services • Improve services for environmentally conscious customers • Duquesne Light was the first utility company to install a plant-wide scrubber system to improve air quality

7. Value Added • Online Accounts / Bill payment • Energy Consulting • Industry Specific Workshops (example: Certified Food Handler Program) • Business Development Resources (example: How to start your own business) • Company Information (example: 24-hour customer service; background)

8. A Sample of Online Bill Pepco allows customers to view and pay their electricity bills.f

9. Southern California Edison (SCE) • Helped 539 firms with Economic Development Rates and other incentives. • Preserved 118,114 jobs for Californians. SCE’s business development services has had significant results:

10. Words from Customers "The rate we received from Southern California Edison will enable us to expand our business, install state-of-the-art equipment, stay competitive, and hire nearly two dozen new employees.” - vice president of General Clinical Plastics "In addition to addressing our energy costs, SCE also provided assistance with planning our new construction, so that we can achieve optimal energy-efficiency in our new plant,"- Yoshio Morakami, chief financial officer and treasurer of Panasonic Disc Services Corp.

11. Policy Issue: Electric Deregulation Advantages for consumers • Keep your current utility or choose another provider. • You can choose a pricing plan that fits your needs (different rates for day and for night, or for different seasons). • Increased efficiency should produce lower electric rates. • Having more time-of-use options will give consumers more incentive to use electricity efficiently to lower their costs. Advantages for suppliers • Electricity producers will have incentive to operate as efficiently as possible so they can be competitive, remain financially viable, and earn a profit for their shareholders. • Reducing costs will encourage businesses to remain in the states they are in, as prices should equalize across the country. This could mean more jobs and more business investment.

12. Recommendation Indirect Business Promotion and Targeting • Establishing Community online networks • Developing a community presence in communities where they conduct business • Using their market position to educate B2B consumers about the benefits of electricity, while at the same time promoting their business services and products to future consumers.

13. Recommendation Expanding Value Added • Leverage existing brand strength and market dominance into divergent business areas • Energy-Related Consulting Services - tariff and trade strategic planning - environmental regulatory strategic planning - energy feasibility and optimalization planning • Economic Development Strategic Planning Practice • Using market capitalization to integrate services, which help lure a repeat clientele • Developing strategic partnerships and alliances with high-tech partners such as Motorola

14. Recommendation Business Strategy Positioning • Electric companies should follow the lead of industry leader of The Southern Company, and diversify their holding into other related high return consulting services. • Develop a global strategy that looks to take advantage of the emerging economies of Asia, Eastern Europe, and Latin America. • Enter into strategic alliances with industry leaders in other sectors of the economy.

15. Recommendation Interface Enhancement • Explain subsidiary and supplemental services separately • Make customer feedback forms in survey and comment box form • Offer a discount and free switching cost for customer to try main or supplemental services. • Clearly state purpose of company on the first page