They will, of course, see their bills decrease as competition replaces monopolization. But price is just one factor of an equation that adds up to a bonanza for manufacturers.

"The company will have the ability to make more frequent energy purchase decisions," said Will Davis, manager of economic development of American Electric Power's Virginia and Tennessee operations.

Utility companies will want to secure clients, so large industrial users will find themselves in demand by suppliers, encouraged to sign contracts for a negotiated low price. And once a utility secures a client, it's going to want to make sure that client stays profitable, so it's going to do everything it can to ensure the company's success.

That means utilities will attempt to differentiate their product from the pure commodity sale of electricity in a number of ways. Whether that means installing new equipment or reducing energy use during peak hours, the result will be favorable for the manufacturer.

In a competitive environment, utility companies will find that they need to become more competitive and "sell" their products more than before. They will need to know their customers, they will need to know their customers' industries, and they will need to build customer relationships.

Utility companies won't be able to compete solely on price. They will need to provide the services their customers are looking for, services designed to keep their customers in business for the long term. They also will need to help customers expand, and their energy-efficiency programs often do just that.

In Virginia, deregulation is being studied, with some utilities, including AEP, pushing hard for competition.

"Deregulation really increases the menu of services that a power company can offer," said Davis. "You tend to be more original, you tend to develop more products and services, to be competitive. Deregulation is an impetus for creating new market ideas."

For example, AEP offers ProCure, a software program that provides economic development offices with the ability to capture and manage a host of sites, buildings and community data. In anticipation of deregulation, AEP has established an unregulated subsidiary through which it sells products such as ProCure.

Deregulation is also expected to result in a consolidation of providers. AEP anticipates growth in a number of areas to remain competitive.

Watch the West Coast
On the other side of the country, in Arizona, the deregulation process is in the works.

On January 1, 1999, deregulation will begin with 20 percent of peak demand in commercial, industrial and residential use. It is expected to reach 100 percent in 2003.

"We're projecting that when deregulation hits Arizona, most of the customers will have at least a 10 percent savings," said Ben Warren, program manager for business development with Arizona Public Service.

Generation, or the process of producing electricity, will be the only aspect of the industry deregulated in Arizona. Transmission and distribution, or the system of delivering energy to customers, will continue to be regulated, by the federal government and the Arizona Corporation Commission, respectively.

"The big change is going to be the cost of the power itself," said Warren.

In California, where deregulation will become effective January 1, manufacturers will have a host of new choices they never before had to make.

"It's going to be very difficult for the customer to sort through the clutter and all of the choices," said Grant Thomas, of Southern California Edison.

All energy companies will buy their energy from a power exchange whose cost will fluctuate with the market. Therefore, the companies will be left to compete on service, reliability and cost.

And who will they compete for most fiercely? Manufacturing customers, simply because of the fact that they use so much energy.

Electric companies will try to convince competitors' customers to switch to their service, and the big winner will naturally be the consumers.

David Rumbarger of Carolina Power & Light said the country will keep its eyes on California to watch the effects of deregulation unfold.

"I think it's going to make energy purchases more complicated to the point where most industrial customers will need a partner to help," he said.

Companies like Carolina Power & Light will try to transform themselves into one-stop resources for educating customers on energy purchases, but manufacturers will still need to become more involved in purchase decisions.

Following the footsteps of other deregulated industries
Some believe deregulation will actually create a new occupation.

"I think there will be a new field of this consultant slash aggregator that will work with individual companies to get the lowest possible price," said Scott Fulford, manager of economic development, marketing with PSI Energy, Inc.

In Fulford's view, the electric industry will follow in the footsteps of other industries that have undergone deregulation: telephone, trucking, airline.

"All of those industries have realized an overall decrease in costs," he said. "There's no reason to believe the utilities industry will be different."

Fulford's state of Indiana is looking at deregulation from a legislative standpoint, but it's taking its time. Indiana is a low-cost state, so the sense of urgency surrounding other states' deregulation processes doesn't exist there.

For example, reciprocity. Should Company A in a regulated state be able to compete for customers in a deregulated environment, when Company B in the deregulated environment can't reach into Company A's pool of users?

Still, whatever the answer to that question, energy users win in the end.

In New Hampshire, where deregulation is scheduled to take place between January 1, 1998 and July 1, 1998, an overall reduction in price is also anticipated. Patrick McDermott, of the Public Service Company of New Hampshire, believes industrial customers, because of the sizable load they carry, will be able to create ways of reducing costs even further.

"I think eventually large manufacturers that are part of multi-state firms will have increased buying power and will be able to do better price-wise by combining their loads throughout the country," he said.

Change is hitting the electric utility industry, and its effects will soon be felt across the country. So, as deregulation sweeps across the industry, manufacturers would be well advised to stay alert because, as Thomas put it, "In any industry that deregulates, the first to be affected will be the large industrial customers."