โ Scribed by Parodi, John L.
No coin nor oath required. For personal study only.
ith the continued movement of the natural gas and electric industries toward increased competition, utilities face fundamental changes in the way they price certain energy products.
As the natural gas and electric utility industries move through restructuring, regulatory control on product pricing will be supplanted, to various degrees, by market control, depending on the product and the regulatory jurisdiction. The market for energy commodities, or "molecules and electrons," will probably become very competitive. Presumably, the transmission and distribution functions will remain regulated, although the nature of that regulation will likely change. In addition, many of the other services traditionally provided as part of the bundled utility products (i.e., metering, meter reading, billing, and appliance servicing) will become unbundled and be provided in a competitive marketplace. Finally, there are new competitive markets being created as utilities and other energy and energy service providers envision and develop innovative products.
As these newly competitive markets attract competitors, utilities are finding that the traditional methods for product development and pricing are no longer viable for the following reasons:
Cost-based pricing does not work unless your costs are less than that of your competitors. The "one-size-fits-all" approach to product design W
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