ANALYSIS: Avoiding suffocation amid gas deregulation

The forthcoming deregulation of the gas market means plenty of opportunities for public relations firms as 15 companies battle for their share of the market

The forthcoming deregulation of the gas market means plenty of

opportunities for public relations firms as 15 companies battle for

their share of the market

Half a million households in the south-west of England will, from 29

April, be able to choose which company supplies their gas in a test run

for deregulation of the gas market in the rest of the country.

Not surprisingly, it has led to fierce competition between the 15

companies vying to sign up households0 - and among PR agencies itching

to get a slice of the business.

Regional agencies have been the initial winners because of their

knowledge of the media in the south-west but, as the gas companies start

to turn their sights on the national roll out in preparation for total

deregulation in 1998, rich pickings for the big agencies are also on the


Key Communications and GCI London were the latest firms to pick up gas

work when they landed accounts for Calor Gas last week.

The task facing the gas companies is far from a push-over. As Total Gas

Marketing’s development manager (business), Chris Bourke, says: ‘People

are asking who are all these new companies. They are trying to evaluate

companies apart from price, but the vast majority of companies are much

of a muchness.’

Nor are entrants to the gas market helped by the generally poor image of

utilities, which, particularly in the gas industry, hasn’t been helped

by the negative coverage surrounding outgoing British Gas chief

executive Sir Cedric Brown.

The public castigation last week of one of the key competitors, SWEB

(South West Electricity Board), by the Gas Consumers Council and Devon

County Council’s Department of Trading Standards, for its alleged high

pressure door-to-door sales, hasn’t helped either. Added to this

backdrop is the fundamental problem of overcoming householders’ fears of

changing suppliers.

Uncertainty about the launch date for the trial has also created

problems for the gas companies. It was only last week that the

industry’s watchdog, Ofgas, announced that the start of the trial had

been shifted from 1 April to 29 April. Companies have had to go back to

households which have signed up with them to explain what the delay

means to their next bill.

As if all this wasn’t enough of a set-back, there is the further

difficulty of trying to promote a non-visual, commodity product. Price

has become the key differentiator, with customer service running in

second place.

So, who’s winning the battle? At this stage it really is too early to


SWEB, started out as favourite because, as it is the local electricity

supplier, it is a well-known name in the area. Consequently, SWEB hasn’t

used external PR agencies or advertising campaigns, concentrating its

low key approach on county fairs and handing out leaflets.

However, it has certainly done itself no favours by its alleged pressure

sales tactics. It is also having to fight off resentment of its US

ownership. SWEB’s head of corporate communications, Jim Moir, says that

door-to-door sales have now been halted. He doesn’t believe that the

company’s image has been badly damaged, pointing out that 40,000 people

have now signed up.

The much less well-known Amerada Hess, on the other hand, appears to be

doing quite well. Amerada Hess marketing director Malcolm Breton says he

anticipated the potential for problems with door-to-door sales, because

he had seen similar practices when working in the life assurance

business, and turned it into a selling point by not doing direct sales.

Long before the complaints about SWEB started rolling in, Amerada Hess

had sponsored police leaflets warning about the dangers of door-to-door


‘In the short term it means I don’t have 41,000 customers but those I

have are happy and unlikely to leave because they weren’t pressured into

their decision,’ says Breton.

Plymouth-based Coleridge PR has been handling regional public relations

for the Calor/ Texaco joint venture Calortex. Coleridge account director

John Hitchens points out: ‘There is only one daily and three evening

papers, so much of the press is local and parochial. We’ve concentrated

on working out the savings each town would make if they switched to

Calortex,’ says Hitchens. The local angle has allowed Hitchens to make

the most of Calortex’s strong regional network of outlets at a time when

British Gas has been closing showrooms around the country.

For British Gas’ PR team, it’s a difficult time. Due to its monopoly

position, it is hamstrung by regulations about what it can and can’t do

in the lead up to deregulation. Consequently it has been unable to

announce its price structure, which has been key to its competitors’

campaigns. It is also tight-lipped about its plans for using additional

PR agencies and campaigns.

‘While we are not standing on doorsteps, we are sending out literature

to customers and setting up help lines and saying to customers that they

do not need to do anything on 29 April,’ says Neville Barltrop, British

Gas trading media relations manager.

Amerada Hess’ Breton says independent research he commissioned three

weeks ago shows that only three companies have brand awareness of more

than five per cent. Not surprisingly, British Gas topped the table,

followed by SWEB. Amerada Hess trailed closely behind in third place.

Now that a firm start date has been set for the start of the trial, the

PR machines will crank into full life. Win or lose in the regional

trial, the experience will prove invaluable to the gas companies as they

gear up for the big test - the national roll out in 1998.

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