Each year hundreds of oil or electric customers call Boston Gas to ask about fuel-switching. What do they look for?A gas utility can boost sales only one way-by gaining new customers. And in today's slowly growing economy, conservation trends limit growth opportunities. The average household today uses two-thirds the energy of 15 years ago. Commercial and industrial (C/I) customers also conserve. If a gas utility is to grow, a majority of its new customers will likely come from competing fuels, such as oil or electricity.
But which customers will make the switch? Why, exactly, does a business or individual replace its old oil-fired or electric furnace with a gas-fired unit?
Gas utilities can adopt several different approaches to study the reasons for fuel-switching. Among these approaches, a statistical analysis is probably the most efficient. It doesn't cost as much as a customer survey, which requires the utility to design, print, and mail questionnaires, and then follow up with long telephone conversations, focus groups, and so forth. A successful statistical analysis can also create a mathematical model suitable for forecasting gas demand and evaluating the costs and benefits of advertising and marketing strategies. That's exactly what we've done at Boston Gas. We have developed a forecasting model that estimates the annual inflow of new, fuel-switching C/I customers.How Many Will Ask?
Every year hundreds of managers and owners of C/I establishments contact Boston Gas about converting existing oil-fired or electric equipment to gas. We wanted to know whether we could predict customer behavior-both for intial inquiries and for actual equipment conversions.