ユーティリティ企業の価格設定戦略

Abstract

Introduction

As energy markets have liberalised across the world, the pricing function within utilities has changed from being one of cost recovery to being the major strategic tool for managing demand and targeting retail margin. Uncovering the tactics suppliers employ in liberalised markets and the knock on effects on the business as a whole is paramount.

Scope

• Covers how both B2B and B2C pricing decisions are made
• The impact of changing wholesale market dynamics on the retail landscape is considered

Report Highlights

Wholesale price is the largest and most volatile component of end user price and heavily influences retail strategies

Price is a strong lever for managing the Industrial and Commercial portfolio

In competitive markets, B2C customers have to date been less sensitive to price than B2B customers and utilities strategies reflect this fact

Reasons to Purchase

• Understand how market liberalisation has revolutionised the role of the pricing function in utilities
• Interpret utility pricing behaviour across various end user market segments
• Understand how certain end user segments respond to price signals

Table of Contents

• DATAMONITOR VIEW
  • CATALYST
  • SUMMARY
• ANALYSIS
  • Though at a market level energy demand is relatively price inelastic, in competitive markets the pricing function is revolutionised
    • Total demand in energy markets is largely price insensitive
    • Historically, with a captive customer base, utilities set prices to cover costs
    • In competitive markets, individual utilities' pricing decisions are fundamental to the overall success of the business
    • The pricing challenge for utilities is in keeping margin high while maintaining a customer base
    • Despite the presence of competition, outside influences can still impact upon retail price formation
  • Wholesale price is the largest and most volatile component of end user price and heavily influences retail strategies
    • Wholesale costs are the largest and most volatile component of retail prices
    • The wholesale division must manage the balancing challenge, buying according to their customers demand
    • Trends in the wholesale market can deeply affect the retail landscape
  • Price is a strong lever for managing the Industrial and Commercial portfolio
    • Price is the most important aspect of service to I&C energy buyers
    • The I&C market features a range of product options reflecting usage profile and risk appetite
    • Competitive tendering removes hidden margin and introduces a role for intermediaries in demand management
    • Pricing strategies for smaller businesses consider willingness to switch and cost of acquisition when offering renewals
    • Upon market liberalisation customers are divided along arbitrary lines
    • Specialisations develop as markets mature and new entrants target specific buyer segments
  • In competitive markets B2C customers are less sensitive to price than B2B customers, and utilities strategies reflect this fact, but it is still the most important factor
    • In B2C retail, products tend to be more standardized and offer less scope for influencing consumer behaviour via price differentials
    • Customer inertia remains dominant and therefore legacy customer power is a key opportunity
    • Cross selling may be a way of retaining customers on high margin products
• APPENDIX
  • Ask the analyst
  • Datamonitor consulting
  • Disclaimer
  • List of Figures
    • Figure 1: US electricity demand and price index 1994-2005
    • Figure 2: Price setting in a captive market
    • Figure 3: The evolution of absolute margin under competition
    • Figure 4: UK wholesale power and gas prices
    • Figure 5: Potential exposure to the balancing market
    • Figure 6: Margins and costs under a theoretical falling wholesale market scenario
    • Figure 7: Industrial buyer research, importance of various influencing factors upon choice of supplier
    • Figure 8: I&C contract types
    • Figure 9: The influence of TPIs under competition
    • Figure 10: Pricing matrix applied to Small Business customers
    • Figure 11: Market shares within buyer segments with regional segmentation
    • Figure 12: Market shares within buyer segments after supplier specialisation
    • Figure 13: B2C Market Churn rate UK 2002-2006
    • Figure 14: Indicative annual dual fuel bill (excluding DUoS), 2004 to date
    • Figure 15: Customer wins and losses and price relative to market
    • Figure 16: Margin tactics when cross selling dual fuel