Profiting by selling less.

• Author: Beck, Bill
• Position: Marketing technique of Indiana's public utilities

"Demand-side management" is the key to electric and gas utility marketing these days.

Getting customers to buy into a program of conserving energy is the task today of marketers at Indiana's gas and electric utilities. It's called demand-side management, and the goal of the program is to convert Indiana's energy users to the most efficient possible use of electricity and natural gas.

"Our overall theme is a wider and wiser use of electricity," explains Dan Brackemyre, director of sales at IPALCO Enterprises Inc., the holding company for Indianapolis Power & Light Co.

"Our basic message is the wise use of energy," echoes Michael Hanley, marketing communications manager for Indiana Gas Co. in Indianapolis. "And we're doing that in a plethora of ways."

IPALCO and Indiana Gas aren't alone in marketing demand-side management to their customers. Nearly every utility in the state has jumped on the DSM bandwagon.

The reason is simple, especially for the utilities working the electric side of the street. Skyrocketing costs and stifling regulatory requirements have made the prospect of building new power plants unpalatable. Electric utilities call it adding base-load generation, and their experience with building new power plants has caused them to reassess the philosophy of growth for growth's sake during the 1970s and 1980s.

Cost overruns at the aborted Marble Hill nuclear plant in Southern Indiana nearly drove Public Service Indiana into bankruptcy court during the last decade--and did force Wabash Valley Power Association, one of the minority partners in the plant's construction, into a Chapter 11 filing.

"Our whole goal here is to delay the need for more power plants," says Tom Van Paris, manager of communications services at PSI Resources, the Plainfield-based holding company for PSI Energy. "Our goal is to save 120 megawatts by 1995. Originally, it was 85 megawatts by 1995, but we did pretty good on our first year."

That 120 megawatts is equivalent to about a quarter of the output of a new 400,000-kilowatt base-load generating unit. With construction costs for a new 400,000-kilowatt plant approaching $1,000 per kilowatt hour or more, the savings for deferring such construction could add up to $400 million.

Some analysts, in fact, believe that IPALCO's hostile takeover bid for PSI is being driven by the Indianapolis utility's desire to push construction of its planned Patriot coal-fired generating station in Southern Indiana back into the next...