UTILITIES

Consolidation is a big issue in the Utilities segment. This together with cross selling and the markets opening up to third party resellers is requiring the utility vertical to update its infrastructure and learn to compete in a fierce marketplace that the traditional monopolies have not been used to. UK is leading this change with other countries expected to follow soon. Liberalistaion of the utilities market started in the UK almost 20 years ago, following on from the Thatcherite reforms that saw the telecoms market open up. The obvious benefits to consumers in the form of increased choice and lower prices have been recognised in continental Europe too - although rather later than in the UK. TekPlus is very familiar with the developments that are taking place elsewhere - not only the countries of the European Community but also those further afield such as Turkey.

Liberalisation has brought many changes to the Utilities sector other than consumer choice. Competition, market trading, M&A activity and environmental legislation has transformed the sector. These have all had a significant effect on investment in technology with networking, communications and call centres being the most significant.

The electricity sector in the UK used to comprise a generating monopoly and local distribution monopolies. Now there are about 40 generating companies just in the UK including merchant generators often owning only one plant. New companies can enter the market due to the widespread adoption of Combined Cycle Gas Technology (CCGT) that requires none of the expensive infrastructure from coal-fired or nuclear power stations.

The gas market generally evolves in a number of different way but the market is generally divided into gas producers, gas transporters over the National Transmission System (NTS) and gas suppliers. In UK the gas equivalent of the National Grid is Transco, which has a statutory obligation to balance demand and supply across the country. In addition to Transco another dozen companies are approved gas transporters with their own pipe networks for distribution. A customer is now able to buy gas from any gas supply company licensed to sell gas.

While the water industry has been privatised in the UK, the nature of the product militates against an open market in quite the same way as gas and electricity. Consequently the opportunities and innovations have not been as dramatic.

The new entrants to the utilities sector have been the most energetic in using new techniques to gain customers. Without established sales and marketing structures, these companies use energy brokers and consultants. There are also on-line web sites where the costs of alternative suppliers are calculated automatically.

The UK market will be opened up even more from 1st April 2005 when the British Electricity Trading & Transmission Arrangements (BETTA) come into force. It will bring in a common set of trading rules so that electricity can be traded freely across the nation, with a system (grid) operator, independent of generation and supply interests so that it has no incentives to bias.

TekPlus understands the utilities market well with in-depth knowledge to provide advice on which products and solutions have the ability to make this transition.