Michael T. Burr
By now you`ve probably heard about the new Julia Roberts movie, Erin Brockovich. If you haven`t, it`s based on the true story of a legal assistant (Brockovich) who in 1992 began helping attorney Ed Masry win a $333 million settlement against Pacific Gas & Electric. The settlement involved 650 people who blamed PG&E for a water supply contaminated with the gene-damaging hexavalent chrom- ium, which plaintiffs said caused cancer and other illnesses in Hinkley, Calif.
The tagline for the movie is “She brought a small town to its feet and a huge company to its knees.” While PG&E is downplaying the effect the movie might have on its prospects in continued environmental litigation, there`s little doubt that the film has not helped the company in California`s competitive retail energy market.
A March 21 story in the respected Sacramento Bee newspaper quoted Hinkley resident Roberta Walker as saying: “They lied in my kitchen, they lied to my face, they lied on paper.” Further the paper asserts that Walker hopes the movie will “begin to change the image of PG&E, one of the nation`s biggest utilities.”
Further, the notoriety might help the cause of cities in PG&E`s service territory that are seeking to opt out and form their own municipal utilities. The city of Davis, for example, is the site of a petition drive to place on the November ballot the option of forming a local public utility district.
When the dust settles-or, rather, when all the popcorn adheres to the theater floor-PG&E might find the greatest impact of Erin Brockovich is not in the court room, but in its retail supply business. In a commodity industry like electricity supply, packaging is everything. Further, a company`s image makes up a big part of the package. To the degree that customers associate PG&E with Julia Roberts, contaminated water and sick babies, its competitive position will suffer.
So far that hasn`t been much of a problem. Retail competition has been fairly slow to build, largely due to transition charges that limit the potential for new entrants to undercut incumbents` rates, publicly financed price reductions on incumbents` power rates, and the heretofore nascent state of Internet commerce.
None of those barriers to competition will last. Julia Roberts` movie, however, will continue playing in theaters for months, and in the video stores for years after that.
Pretty Woman`s revenge is not limited, however, to PG&E. Other cooperatives and customer aggregators are springing up across the country. For example, First Rochdale, based in New York City, is a purchasing co-op representing housing groups and non-profits to buy power wholesale from a North Carolina rural electric company. In northern California, in NorCal Electric Authority`s territory, the new NorCal Cooperative is offering a range of services to the Authority`s 41,000 ratepayers.
The obvious message for utilities everywhere is that public image counts when it comes to retaining customers. Although small customers bring only small profits on an individual basis, as a whole they represent irreplaceable cash flow needed to support ongoing utility operations.
But the less obvious lesson is this: every employee in every facet of operations should automatically behave as a customer service representative. Every employee routinely encounters customers. Employees who feel invested in and accountable for the company are more likely to avoid the errors that lead to situations like the one dramatized in Erin Brockovich.
It isn`t enough to forge strongly worded corporate policies supporting environmental compliance and customer service. Customers` opinions change quickly in the retail market, so only a sustained, genuine effort to do the right thing at all levels will succeed in maintaining a healthy corporate image.
The burden of fostering this kind of a culture falls squarely on the shoulders of management. Only managers can craft compensation policies and management approaches that result in employee accountability. Those who fail eventually will find themselves defeated in the competitive marketplace, where customer orientation is rewarded, and complacency is punished.
Pretty Woman`s revenge can be deadly.