It’s probably too early to call this a trend, but utilities seem to be starting to look for ways to get out of contracting.
Last month, we reported that Delaware-based utility holding company Connectiv doesn’t want to be in the HVAC business after all. Connectiv is investigating ways to unload its heating and cooling unit that has competed against local contractors for years.
Instead, Connectiv wants to focus on its “core businesses,” which apparently don’t include its contracting operations.
As the company’s chairman and CEO explained it, “These markets have evolved differently than expected.”
Things haven’t exactly worked out according to plan for Kansas City Power & Light either. The utility also may be looking for an exit from the HVAC business. Its Home Service Solutions subsidiary lost $1.1 million in the first quarter this year.
These activities in the Mid-Atlantic and Midwest reminded me of a workshop I attended at last year’s ACCA national convention in Orlando. The panel discussion was called “How Utilities Think,” as I recall, and was intended to give ACCA members insight into utilities’ market strategies.
Much of the session consisted of utility spokesmen telling contractors to stop their complaining and get used to the idea of deregulation. Consumers want deregulation, they said, and contractors should make themselves more efficient to get ready for increased competition.
But another speaker on the panel had competed against utilities in an industry other than HVAC or plumbing. He noted that the session should not have been called “How Utilities Think” but instead “If Utilities Think.”
His advice to members of the Air Conditioning Contractors of America was not to do anything about utilities. He believed that utilities would lose interest — and money — in contracting after a few years and move onto something else. That’s what had happened in his industry. Some contractors in the audience worried aloud that they might not be able to afford to wait that long.
While the speaker’s words now have the ring of prophecy, we don’t suggest that contractors do nothing about utilities. As contractors in Michigan and elsewhere know, they have to remain vigilant and active in fighting unfair competition from utilities at the legislative and regulatory levels.
In fact, contractors should do what they can to help the utilities that compete unfairly find ways to get out of their business.