Customer Switching in the German Major Power Users Market

SUMMARY

INTRODUCTION

Almost five years after formal market opening, customer acquisition and churn in the German power sector is finally becoming a reality. However,winning new customers requires a concerted effort on behalf of suppliers. The report aims to guide utilities in their business development strategiesby providing a detailed analysis of the customer switching process to date and its trends to 2004.

SCOPE OF THE REPORT

• Between June and October 2002, Datamonitor conducted in-depth interviews with 387 German power users in the >1GWh sector
• The survey coverage amounted to a combined annual consumption of 72.6TWh, representing over 31% of Germany's over-1GWh segment
• A comprehensive range of industries and consumption bands are analysed

REPORT HIGHLIGHTS

Almost half of Germany's >1GWh power market has changed hands since market opening, including one-third of the volumes just in the 12 months toDecember 2002.

A large number of the country's major power users would like to change supplier in the next 12-24 months but are sceptical about finding anattractive enough offer.

The paper and pulp industry on the one hand, and iron and steel on the other, have seen the greatest redistribution of volumes of business betweensuppliers. In other industries, however, the larger users did not find it easy to secure a deal that was significantly better than the one theyalready had with their incumbent supplier.

KEY REASONS TO BUY THIS REPORT

• Track and predict customer switching patterns in your target market
• Understand the dynamics of the switching process in various customer groups and plan your S&M effort accordingly
• Forecast customer switching rates in 2003-04 and assess the volume of business that will become available during this period

TABLE OF CONTENTS

Overview

Introduction

Scope

Report Highlights

Reasons to Purchase

EXECUTIVE SUMMARY

• Introduction
• Towards a more level playing field
• Large users are driving the switching process
• Much remains to fight for

INTRODUCTION

• What is this report about?
• Who is the target reader?
• How to use this report

MARKET CONTEXT

• Introduction
• Key findings
• From formal opening to a level playing field
  • Obstacles to greater competition
  • The search for stronger regulation
• The emergence of the suppliers'  "Bundesliga"
• The challenges for smaller suppliers
• Conclusions

MARKET DYNAMICS

• Introduction
• Key findings
• Overall customer switching patterns
  • Switching bahaviour since market opening
  • Switching behaviour in the last 12 months
• Consumption profile analysis
  • Customer segmentation
  • Switching in the medium and small consumption bands
  • Switching in the large consumption band
  • Switching in the extra-large consumption band
  • Switching in the extra-extra-large consumption band
• Industry analysis
  • Customer segmentation
  • Switching in electrical and mechanical engineering
  • Switching in the paper and pulp industry
  • Switching in the chemicals and fertilisers industry
  • Switching in the iron and steel industry
• Conclusions

THE FUTURE DECODED

• Introduction
• Key findings
• Switching rates to decline
• The savings expected by potential switchers
• The timeline for switching
• Conclusions

APPENDIX

• Datamonitor' s MEU portfolio
  • Introduction
  • Strategic Planning Programme structure
• Research methodology
  • Major Energy Users'  research
  • MEU Survey - Germany
• Further readings
  • Reports published to date
  • Reports forthcoming later in 2003 (provisional)
  • Market briefings
• Report writing team

LIST OF TABLES

Table 1: Switching behaviour since market opening

Table 2: Switching behaviour in the last 12 months

Table 3: Composition of the survey sample, by consumption category

Table 4: Switching behaviour of medium-sized and small users

Table 5: Switching behaviour of large users

Table 6: Switching behaviour of extra-large users

Table 7: Switching behaviour of extra-extra-large users

Table 8: Composition of the survey sample, by industry

Table 9: Switching behaviour in electrical and mechanical engineering

Table 10: Switching behaviour in the paper and pulp industry

Table 11: Switching behaviour in the chemicals and fertilisers industry

Table 12: Switching behaviour in the iron and steel industry

Table 13: The likelihood of switching (largest supplier)

Table 14: Levels of price savings required by would-be switchers

Table 15: The likely switchers'  contract expiration date

LIST OF FIGURES

Figure 1: Levels of price savings required by would-be switchers

Figure 2: German electricity market' s vertically integrated structure

Figure 3: I&C electricity market segmented by supplier type

Figure 4: Switching behaviour since market opening

Figure 5: Switching behaviour in the last 12 months

Figure 6: Switching behaviour of medium-sized and small users

Figure 7: Switching behaviour of large users

Figure 8: Switching behaviour of extra-large users

Figure 9: Switching behaviour of extra-extra-large users

Figure 10: Switching behaviour in electrical and mechanical engineering

Figure 11: Switching behaviour in the paper and pulp industry

Figure 12: Switching behaviour in the chemicals and fertilisers industry

Figure 13: Switching behaviour in the iron and steel industry

Figure 14: The likelihood of switching (largest supplier)

Figure 15: Levels of price savings required by would-be switchers

Figure 16: The likely switchers'  contract expiration date