Electricity labelling is essential for successful market deregulation

Electricity utilities need to follow the example set by the food industry and implement detailed labelling in order to keep pace with deregulation and encourage free market choice, say US researchers.

In a survey of more than 1,000 adults from eight cities across the US, Ohio State University Professor Brian Roe, who lead the research, found that consumers can become confused when trying to make a comparison between electricity utilities due to the lack of standardization in marketing materials which include or omit any information that companies choose. The research revealed that customers want to choose electricity utilities in the same way that they choose between brands of food at the supermarket – by checking standardized labelling.

“Aside from a situation like the California energy crisis, only one thing can kill deregulation – people’s unwillingness to shop around for new utilities,” said Roe. “We found that people feel more comfortable about trying a new utility if they can base their decision on standardized information.”

Consumers questioned in the survey were asked to chose utilities either by using their standard marketing materials, or by using a chart showing key characteristics of the companies, such as average monthly cost per customer, quality of service, air emissions relative to the national average, and the percentage of power obtained from environmentally sustainable sources. According to Roe, those presented with the chart made more confident choices. “The chart let consumers zero in on the factor that was most important to them,” he said. “Whether they cared more about cost or renewable resources, they felt more confident making a decision when they could clearly see how each company stood on that issue.”

Roe also points out that the chart provides a much more true picture of corporate environmentalism. Companies with an unremarkable environmental record, which may decide to omit such information from their promotional material, could be inadvertently causing their customers to assume that they have a very bad environmental record.

The survey was conducted in: Cincinnati, Ohio; Holyoke, Massachusetts; Houston, Texas; Jacksonville, Florida; Riverside, California; Philadelphia, Pennsylvania; Portland, Oregon; and Salt Lake City, Utah.

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