There’s no easy way of getting consumers to sit up and take notice of their electric utility – short of cutting off their electricity or hitting them with a four-figure monthly bill.
But that’s the challenge facing Toronto Hydro, as the Ontario electricity market opens up to competition – a challenge to which the utility has responded with a whole series of marketing initiatives, including a recently launched ad campaign designed to inform consumers about the realities of the new marketplace.
Electricity is "a very low-involvement category," says Hilda Mackow, president and chief operating officer of Toronto Hydro Energy Services, the newly formed retail division of Toronto Hydro. But consumers need to know that, as a result of deregulation, they will be asked to choose their electricity supplier.
For the most part, Mackow says, people aren’t aware that they should actively choose a supplier if they want to benefit from the lowering of prices as a result of competition. So the television and print campaign, with its theme "Welcome to the age of choice," aims to set the record straight.
The advertising, created by Toronto-based Padulo Integrated, builds on several previous efforts, notably a print campaign that ran last October, and a CD-ROM-based information package that was distributed to consumers in January.
Toronto Hydro’s ultimate goal is to become known as an "energy" company. To this end, the utility has spun off two new affiliate companies, both of which received licences from the Ontario Energy Board (OEB) in March.
Toronto Hydro Energy Services, the retail arm headed by Mackow, will oversee production and sale of electricity (and may eventually branch out into gas as well), while Toronto Hydro-Electric Systems, a regulated company, will be responsible for the transmission and distribution of electricity through existing power lines.
Advertising and direct marketing will form a major component of Toronto Hydro Energy Services’ activities. Indeed, a direct marketing campaign has already been launched, targeting older homes where energy efficiency may be a problem.
In the online realm, meanwhile, the company now offers consumers the opportunity to sign up as retail customers via the Web. And there are plans to introduce online bill paying in the near future as well, Mackow says.
New retail marketing campaigns can be expected to kick in as competitors launch their own efforts, she adds.
"Customers will have a choice. That’s why the marketing will be so important – to cut through all the confusion that will be out there. You’re going to see a lot of competition for share of customer."
Rick Padulo, chair and CEO of Padulo, says Toronto Hydro Energy Services has the infrastructure, the heritage and the consumer knowledge necessary to give it a major competitive advantage.
"They are going to be very aggressive, very customer-oriented marketers in all levels of the energy business – residential and business," he says. "The bottom line is that the consumer now has a choice, and we’re going to be out there fighting hard for their business."
This new, deregulated marketplace is a direct consequence of Ontario’s Bill 35, The Energy Competition Act, which the provincial government passed in October 1998. Essentially, the legislation allows business and retail customers to choose their electricity provider, and allows electric utilities to choose the suppliers from which they buy their power.
Several companies have applied for licences to become electricity retailers in the province. Ontario Hydro and Direct Energy are among Toronto Hydro’s key competitors, and Mackow predicts that traditional gas companies will join the fray as well.
"Consumers really want one-stop shopping for all their utilities – gas, electricity, water and telephone," she says. "Eventually, if you could only get one bill, wouldn’t that be great?"
