ENECO - power
IN THE MARKET
WHAT'S NewS Issue 4 April 1996
working relations
3
One of the largest energy Utilities in the Netherlands, ENECO is in the process of
changing from a public electricity supplier to broad-based corporate engaged
in telecommunications, cable television and the environmental sector.This
transition requires major changes in how ENECO approaches its clients. CFO
Wim Bovy explains the repositioning in a new market environment, and what f
o
banks should be doing to assist ENECO's growing business.
Created in 1995
following the
merger of a number
oflocal energy
utility companies,
ENECO currently
serves 1 million
clients in a region
which includes the
Port of Rotterdam.
Wim Bovy Over the past few
years, ongoing
deregulation in energy supply has opened
up the sector to market forces. In response,
ENECO has not only reevaluated its
approach to the market, hut has also
expanded its activities into a number of
other, related areas. 'We began with cable
television,' says Bovy, 'and we're now
moving into telecommunications. From
1 January 1998, existing monopolies in
voice telephony will be history in the
Netherlands. Telecom will be a highly
competitive sector, with domestic and
international players vying for market
share. We intend to be a player in that
market.'
CHANGING MIND-SET
Deregulation is a process ENECO knows
all about. 'We've seen the emergence of
market forces in our core business and we
have had to come up with an effective
response,' Bovy confirms. 'Customers
today, especially the large corporates, are
clearly taking advantage of the growing
competition in this market. If they don't
get the right price from us, they'11 go
elsewhere. Obviously, our purchasing
price for energy is not the same as our
sales rates. Corporates understand that
very well indeed and try to get the best
•jossible deal from us.'
-or former monopolies, this is, of course,
a very new way of doing business. 'On the
one hand', Bovy explains, 'you have to
rethink your purchasing strategy. Where
buying supplies was once almost
automatic, you now have to start trading
in energy. The other side is marketing. We
have had to introducé other work
processes and practices, to focus on what
the cliënt wants from us, and how we can
provide it proactively.'
ENVIRONMENTAL RESPONSE
The move into the environmental sector
was a logical progression from the new
approach. 'When you start looking at
cost-effective ways to generate power, then
waste processing is one option.
Recycling is a response to that climate.
Actually, we're in a rather ambiguous
situation here in the Netherlands. On the
one hand, we are expected to do
everything we can to reduce the use of
energy - in the home, in industry, while as
a company we also have to grow our
business.' One result of this ambiguity is a
consultancy role for ENECO. 'We advise
and develop ways for clients to conserve
energy,' he says. 'This may not sound like
particularly good business practice as
what you're doing is showing customers
how to use less of your product. But in the
end, it has a positive effect because it is a
ENECO - CREATIEVE
BANKIER GEZOCHT
Eneco, een van de
grootste energiebe
drijven, begeeft zich door veranderende
marktomstandigheden nu ook op de kabel-
tv, telecommunicatie- en milieumarkt. Door
de toenemende concurrentie is men nu
klantgericht in plaats van produktgericht
bezig. Van haar bank verwacht zij eenzelfde
opstelling.Voor banken die een krediet
faciliteit willen aanbieden, heeft men geen
tijd. De bank die hulp kan bieden bij het
bereiken van de bedrijfsdoelen in de vorm
van projectfinanciering en andere
financieringsprodukten is van harte
welkom.
way to promote cliënt loyalty and so
increase market share.'
CREATIVE SUGGESTIONS
One approach which meets both
requirements is the construction of
cogeneration plants - facilities which not
only produce plain vanilla power, but also
have other, often environmentally-friendly,
applications.
'A major investment,' says Bovy, 'and this
is, of course, where banks come in. Most
of our normal finance requirements are
met by private placements. We go to banks
primarily for project finance. I don't think
we're a particularly easy cliënt for banks
because we do not have obvious, clear-cut
product requirements. So, for us, a banker
has to come up with creative suggestions
tailored to our particular situation. That
means they have to know who we are and
what our aims and goals are - both now
and in the medium and long term. They
have to show interest and that they are
thinking about what we're doing.'
ADDING VALUE
However, Bovy also agrees that is not an
easy exercise. There is a fine line between
showing interest and showing up regularly
without anything to put on the table.
'Although I understand you can't build a
relationship without meeting up once in a
while, quite frankly I have better things to
do with my time than sit chatting with
bankers who have nothing tangible to
offer me, except perhaps credit. I.et me
put it this way, we want to work with
bankers who are adding value for us by
coming up with ways to assist us in
achieving our goals. We want to meet with
them when they have something
constructive to say or a solution that fits
our requirements. At ENECO we are
changing our mind-set so that we work
from a cliënt perspective. I would like to
see more of the same attitude from
bankers.'