Business Plan as of now

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Executive Summary

1.0 Business Description

PowerSelect aims to be a full service provider of electricity requirements to small to medium enterprises (SME's) and household consumers.

PowerSelect will enable SME's and households to take advantage of the deregulated electricity market and source through buying blocks, the cheapest available power supply. By having a number of purchasers in any grid area Powerselect will be able to purchase electricity in 1/2 hourly lots at volume high enough to ensure purchasing power. By buying in half hour lots, Power Select can provide real time forecasting, and monitor fluctuations in price of whole sale suppliers of Electricity.

PowerSelect will make extensive use of Wireless Application Protocol (WAP) technology to source meter information from its customers, enabling up to the minute forecasting of requirements. Electricity requirements will then be able to be accurately forecast, and purchased from suppliers enacted. Power Select plans to use meter boxes with cellular capabilities to send electric requirements back to a server. This business concept will rely heavily on WAP to provide up to the minute meter reading. To maintain lower operating expenses in order to keep prices competitive, this technology may be accessed through a strategic alliance with a major technology provider.

The revenue will be generated by charging the customer a base fee for being a member of the coalition. Customers will gain a significant advantage by using Power select to purchase their choice of electric at the price they want. PowerSelect will also offer back office reporting and billing, at a set fee, reducing the client's cost of having to purchase electricity in-house. Other revenue will be generated through consultancy services provided by industry experts on how to reduce electricity usage based on measured usage. As companies implement better electricity usage and begin to produce their own, PowerSelect will also be able to generate revenue by facilitating the sale of electricity back into the grid.

The business plan will also rely heavily on the Internet, with technology currently available to suit the full service provider model. Power Select will use the internet as an access for customers to monitor their billing and electric rates in real time, no longer will customers wait for service men to check meters in which they do not have the means to audit. Power Select will not only address the needs of the SME, but also the individual household.

2.0 Marketing Plan

2.1 Markets

With the rapid deregulation of the electricity supply market, formerly dominated by regional monopoly suppliers, and legislative changes that will not only allow people to choose their electricity provider, but also to also sell excess power back into the grid, opportunities will exist that would enable Power Select to sell to SMEs and the household consumer.

Power Select intends to be the first choice broker for purchase, sale and management of electricity supply. With confusion among SMEs' and household consumers PowerSelect will offer a full service solution to these customers.

The market size in the state of New South Wales alone is 2.7 million households spending up to $500 per year. This market is estimated to be worth $1.35 billion alone.

Australia has over 7 million households reliant upon the supply of electricity. Add in the number of SMEs using between A$6 000-$15 000 electricity per year. ( need to get some rough data here)

With deregulation PowerSelect expects to capture a minimum 5% of the market by 2002 and 20% by 2005.

2.2 Customers

Customers of PowerSelect will initially be the SMEs who stand to make the best return on PowerSelect's service, due to the possibility of high potential cost savings allowing PowerSelect to achieve better margins in the short term. Meter boxes will cost between $500-$900, and as they become cheaper, supplying them as part of the service to household consumers will become more viable.

Customers will not need to have internet access to use PowerSelect services, although for ease of billing and information transfer it would be encouraged. The fact that Australian consumers are relatively early adopters should see internet usage increase to include around 60% of all households by 2001. Most SME's in Australia have internet access (>75%)made this up and they are early adopters on a worldwide scale of internet technology.

By supplying a metering service, owning only the meter box not the power supply infrastructure, Power Select will be able to target all demographics. Because Power Select is not an actual supplier of the electricity, only a broker, Power Select will have the ability to form many strategic alliances in order to offer the best price to customers. Early limitations to the success of PowerSelect will be in achieving a critical mass of users to enable purchasing power in the local area. A marketing campaign in rural areas of sufficient size will mean that PowerSelect will be able to offer a viable alternative to most areas/households/ andSMEs in Australia and the United States. ?do you want to assist them in establishing consortiums?

2.3 Competitors

Through partnerships with a wap technology firm, and the development of patented meter box PowerSelect intends to own the relationship with the customer, and limit churn through offering significant benefits via network effects. Critical mass and low setup costs will help to reduce customer loss once benefits are realised.

PowerSelect therefore needs to be first into this market with and excellent offering. Tough competition is expected form a number of firms currently acting as full service providers in other markets, but competitions will be reduced through patented meter technology and first mover advantage.

3.0 Competitive Advantage

PowerSelect will offer customers a selection and broking service for electricity supply, and through management of the process, and through purchasing power, significantly reduce the cost of electricity supply to these SME.

How 1. The PowerSelect database will measure and record electricity requirements and forecast future requirements accounting for factors such as weather (hot/cold) through a data engine. 2. The electricity purchaser's likely demand is then estimated, aggregated into a buying block and electricity requirements purchased in 1/2 hourly lots. 3. Individual customer usage is then measured, recorded, and a bill generated. 4. Customers receive a daily/weekly/monthly usage report as required, with analysis and recommendations by industry experts on ways to improve and reduce electricity usage.

3.1. Value Add for Customers

PowerSelect creates an informed marketplace which enables customers to benefit through reduced electricity costs.

Groups of buyers will receive better prices

Meter boxes supplied fee and fee charged as % of cost saving.

Accurate record keeping, forecasting and consultancy in regard of achieving best practice

Customers outsource electricity purchasing saving costs through reduced staff and effort.

Offers an independent unbiased and comprehensive service.

3.2. Value Add to Suppliers

PowerSelect enable suppliers to sell bigger blocks of power supply, managed through an intermediary.

PowerSelect simplifies the selling process

PowerSelect may expand the customer base for each supplier

Reduced selling cost and large block leads to increased profit

Reduces back office processing cost through dealing with one purchaser

3.3. Making the market

Electrical suppliers will still be able to deal directly with customers for the purpose of payments and marketing. Through information provide by PowerSelect they will be better able to align their offering with the market.

PowerSelect's initial aim is therefore to secure the customer interface by developing a relationship of trust and security, developing loyalty through offering a compelling value proposition reducing client costs and charging percentage of costs saved.

Building a database of suppliers and purchasers to enable better matching.

3.4. Future Trends

PowerSelect intends to own the relationship with the customer, and to leverage knowledge of the customers to obtain scale and add for benefit the customer in related areas such as gas supply.

Customer leakage will be negligible once the relationship is established as dealing directly with utilities will not be beneficial. Services will be charged at % of savings. Once customers are locked in other ways of providing benefits will be offered.

Rural areas will benefit from the ability of PowerSelect to aggregate knowledge regarding requirements and to better negotiate service provision with utilities and ISPs for example - cheaper rates to rural areas if minimum customer base guarantee eg Bendigo Bank eg. Local example

Aggregation of customer segments -SME and households will provide potential benefits of reduced electricity cost to both parties. As demand reduces in SME @ 5pm household demand increases peak etc etc, making these two segments complimentary

Delivery and Payment

Power Select will sell their power directly to consumers, and send it over lines built, maintained, and repaired by the regulated transmission and distribution utilities (1). Preferably Power Select wants their customers to make request for service, customer service and billing through the internet, but it will not be required. By giving the customer a break in electric price for all customers you utilize the Internet service, PS hopes to spark an initiative among non-Internet customers.

Research and Development

The proposed product Power Select will utilize is a meter equipped with cellular technology that would use the wireless application protocol to transmit electric requirements to a server that would report compile the requirements for a particular region or section to be used by Power Select to forecast the future electric needs. The transmission would occur at a rate of every 120 minutes. Any electricity not used could be recycled back into the grid for further use.

Operations and Manufacturing

Risks

Financial

Timeline

Bibliography and Appendices

http://www.emec.com/deregulation/dereg1.htm

Conclusion



-- Anonymous, November 20, 2000


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