Product differentiation and nonprice competition in liberalised energy markets: what potential for energy services?

There has been substantial change to the architecture of the UK energy industry primarily due to privatisation and subsequent liberalisation. There are currently 29 electricity suppliers operating in the industrial consumers market (January, 2001). Such competition has provided a typical economic outcome, in the reduction of the unit price of electricity for the consumer. A consequence of price competition has been the negative implications with respect to load management programmes and energy conservation through energy efficiency. Consumers are naturally disinclined to optimise consumption when the economic drivers have been minimised. This undoubtedly has a negative environmental outcome due to the acceptance of energy related carbon dioxide emissions being the dominant cause of global climate change, Houghton et al. (1995). This paper examines the intangibility of energy supply and offers a solution comprised of marketing theory and actual industrial customer information. Energy services provide a potential marketing tool with which to convey a value added energy package to the customer. Energy services can be utilised to benefit the energy supplier, energy consumer and satisfy environmental legislation