The Undeniable Effect of Deregulation on Shaping the Modern Utility

Distinctive communication, effective segmentation and customer satisfaction driven by positive customer experience and a well-rounded, differentiated brand have all become critical components to the modern utility in the energy sector.

The trend of deregulation

Historically, these components were not as important. Energy markets were closed off and few, or even a single utility, supplied electricity to a nation through its own vertically integrated infrastructure. This meant utilities simply did not need to pay attention to these components as the consumer had no other alternatives to choose from.

Deregulation of electricity markets started in the early 1980s but did not effectively take off until the United Kingdom deregulated electricity supply in 1990. This caused other established countries to follow the UK’s example and deregulate their own electricity markets.

Deregulation is well underway in many regions such as North America, Europe and Oceania. Asia has not taken large steps but are beginning to do so.
35 countries accounting for 44% of the global energy consumption have started deregulating their energy markets. Source & Photo credit: EnPowered

The deregulation trend has spread widely since the 1990s. Today we are looking at substantially deregulated global electricity environment and more steps are being taken every year to ultimately achieve total deregulation worldwide.

Implications for the utility

The deregulation process has had a serious impact on the utility’s market conditions. Markets are becoming more decentralized, competition is increasing and the demand for market transparency is strong.

This has caused the old-fashioned utility severe problems. They are now dealing with people’s needs and wants – and consumers want to know where their electricity is coming from. Further, the value is shifting from the product itself to the service attached to it. The product has become an experience and the quality of that that experience will influence the consumers’ actions.

Consequently, utilities must now look outside of their internal environment and focus on the customer. They must emphasize more modern touchpoints, captivate customers on mediums on which they want to be engaged and be able to communicate complicated information in a simple way. This requires deep knowledge and understanding of customers and can not be easily achieved without adopting the components of the modern utility.

The Modern Utility requires a well-rounded brand

A strong brand is important to every utility which seeks to adopt the modern way of conducting their business. It is a compass that enhances focus and strategic vision, guides marketing communications, reflects consumer perception and provides differentiation from the competition.

A modern utility brand incorporates all the components. Communication, segmentation, customer satisfaction and experience are all reflected in the brand itself. Such a brand helps consumers make sense of the market complexity by forming relationships with loyal customers, who in turn become less price sensitive and less likely to switch over to a competitor.

A Modern Utility is in harmony with its consumers. The brand is the combination of company identity and company image
A modern energy brand is in harmony with its consumers