What Natural Gas Utilities Need to Do For Energy Transition Success: Building Fuel Preference and Brand Appeal

The gas utility industry is finding its place in the energy transition through an effective, strategic, and customer-centric approach - build strong brand positions, message the benefits of natural gas, relay dedication to clean energy (including Renewable Natural Gas), support clean energy programs and remain cost effective. This direction has led to strong natural gas fuel preference, brand appeal, customer loyalty and continued customer growth.

In fact, the Energy Information Administration (EIA) reports that gas utility customer bases continue to grow every year and now top 65 million.

So, what is behind the strengthening of gas utilities?

Building Strong Brand Appeal

According to the J.D. Power Brand Appeal Study for residential utility customers, natural gas utility Brand Appeal rates significantly higher than electric. Gas utilities communication satisfaction scores higher than electric utilities, their company reputation ratings are higher as well as customer trust.

While electric utilities are equally good at executing on their corporate marketing plans, natural gas utilities retain greater trust and local reputations that result in much stronger overall brand appeal. So, there is something attractive about the natural gas commodity that customers find superior to electricity.

Good to keep in mind that, when positioning your brand appeal for the energy transition, emphasizing company reputation is a top priority.

Natural Gas Utility Service Has a Perceived Economic Advantage

A key reason for natural gas utility customer growth is that the average gas utility bill is smaller than the average electric bill, creating the belief that natural gas energy is more economical than electricity.

Overall customer satisfaction plays a role as well in fuel preference. For instance, customers who are not satisfied with their gas utility customer experience have only a 28% preference for natural gas as their home energy source. Meanwhile, satisfied customers have a 54% preference for natural gas.

And there is more to the preference story.

Natural Gas Fuel Preference

A strong level of utility brand appeal and a sense of economic value by customers has created a fuel preference among natural gas customers that even the constant media cycle touting the energy transition toward electricity has not been able to significantly sway. Most gas utility customers continue to prefer using natural gas. The graph below shows small gains for electricity as the fuel of choice for households, while natural gas preference remains above half among natural gas utility customers.

Furthermore, gas appliance usage remains high indicating that it is going to be very difficult to take items like gas stoves out of American homes. What is more, a mere 3% to 4% of natural gas and electric utility customers are in favor of their utilities supporting electrification (banning of natural gas).

Championing Clean Energy

Gas utilities have taken the environmental high road regarding clean energy. They have touted their renewable natural gas (RNG) efforts, emphasized clean burning natural gas, and tied rate cases to improving the cleanliness of their fuel. Currently, 1 in 5 gas utility customers say it is implementing RNG in their supply and their awareness of the utility’s efforts to improve their environmental impact has grown from 22% in 2019 to 38% in 2022. In addition, over half (56%) of customers who state they want their utility to support clean energy agree that it is dedicated to environmental stewardship. This is a good start to engaging in the energy transition.

However, for continued advancement, gas utilities will need to proactively communicate with their customers to prove they are truly relevant as environmental stewards and energy innovation leaders. In fact, the industry’s best in communications recall on environmental and RNG topics (Madison Gas & Electric) has only 21% recall of these topics. The industry average is a mere 11%.

Successful natural gas utilities have taken the same playbook as electric utilities and created strong brand appeal by engaging customers in their environmental and energy innovation offerings. The result has been that customers provide natural gas utilities just as much credit for their environmental efforts as they do for electric utilities.

A great example of this customer engagement is New Jersey Natural Gas, which has developed a robust solar business through its sister company, NJR Clean Energy Ventures, which posted over $128 million in revenues in 2022. Southern Company Gas has pursued an RNG initiative to help it attain its “zero emissions” goal. SoCalGas launched a branded renewable hydrogen energy pipeline called “Angeles Link,” which also shows promise in transmitting renewable electricity resources. Washington Gas communicates its energy efficiency and conservation achievements to its customers by being named an “Energy Star Partner of the Year.” It also provides a list of local contractors that customers can work with when they upgrade the efficiency of their homes and then mails rebate checks directly to customers upon completed work.

What Natural Gas Utilities Need to Do for Energy Transition Success

• Build a reputation for environmental stewardship
• Use branded and targeted clean energy programs to relate to customers
• Continue to tout the overall benefits of the natural gas commodity
• Increase communications on Environmental and Renewable Natural Gas efforts
• Support ways (like solar power offerings) for customers to transition to clean electricity
• Position natural gas as an economic value

Let’s keep the discussion going. Please feel free to reach out to me anytime to discuss how your utility can best position its brand and fuel in the new energy transition.