Ontario’s municipal electric utilities are on the threshold of a new world – deregulation – a world that within two years will see them competing with their main supplier, with each other, and with aggressive new entrants from the United States.

The impetus behind this new marketplace is Bill 35, the Energy Competition Act. This legislation is expected to be passed by the Ontario government by early November and will set the stage for a restructured, deregulated electricity industry sometime in the year 2000.

What this means is that consumers will be able to choose their electricity distributor – the company from which they buy their electricity – and that company, in turn, will be able to decide from which generating company to buy its power.

Essentially, it creates an entirely new consumer-focused marketing category that will be driven by fiercely competitive brand awareness and loyalty pitches from the involved players. In fact, the day could come when what are now completely distinct utility providers begin to offer competitive services and battle it out for the same share of customer.

Ontario Hydro, the company that right now generates 90% of the province’s daily electricity supply began positioning itself for deregulation last year and now, as the countdown to 2000 begins, the distribution companies – the municipal electric utilities – are entering the fray.

There are 276 non-profit municipal electric utilities in the province serving about 75% of electricity customers in the $10-billion Ontario marketplace.

The largest is Toronto Hydro, alone a $2-billion company, which is readying to launch a major branding campaign that it hopes will help it hang on to its customers and pave the way for growth of the company outside the Greater Toronto Area.

Michael O’Connor, vice-president of marketing for Toronto Hydro, says one of the issues that has come out of market research since he joined the utility about two months ago from Rogers Cantel Mobile Communications is that Toronto Hydro doesn’t have a face.

Customers know that the electricity comes on when they flick the switch, he says, but other than that, they don’t really have a relationship with Toronto Hydro.

‘From our perspective, in order to compete against the bigger electrical providers like Enron or Detroit Edison, we need to have a face,’ O’Connor says.

‘There are more positive attributes associated with this organization than there are negative. We’ve got to use those and mobilize those so we’re providing the best service possible for our clients.’

To that end, Toronto Hydro has hired Toronto agencies Padulo Integrated, to spearhead creative, and Optimedia, to handle media buying.

The two new agencies will be working with Toronto-based packaging and brand identity firm Spencer Francey Peters which was hired earlier this year to help develop a brand for the utility.

Padulo will also be working on Toronto Hydro’s Web site, www.torontohydro.com, which O’Connor says sorely needs to be revamped in order to make it more useful. He points to the Web sites of u.s. utilities that allow consumers to do a quick energy audit and let industrial customers assess their projected energy use.

And that’s just for starters.

Under Bill 35, companies such as Toronto Hydro will be allowed to move into other businesses such as the supply of natural gas or water, provided they form a separate company to do so. Conversely, natural gas companies and other new entrants to the electricity market can do the same.

‘The long range plan is to become an ‘energy’ company,’ says O’Connor.

‘Some hydro companies are even getting into local telephony, home security, and high-speed Internet access, all of which are feasible because we have that connection to the home.’

O’Connor says there are only three companies right now that have a connection into people’s homes – Toronto Hydro, Bell Canada and the regional cable tv companies.

‘So the opportunities are substantial for us,’ he says.

When it comes to their choice of utilities, O’Connor says service and reliability are the biggest priorities for customers, not price. In the deregulated marketplace, he predicts, reliability and attentive customer service will be the key.

Realistically, he says, it will be anywhere from two to five years before Ontario residents really see the type of open competition that will spawn new products and services, and a more customer-friendly approach to the market.