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TOP OF THE NEWS Seeing new market opportunities for itself and its partners, Gulf will now offer consumers electrical service GULF GOES ELECTRIC BY KEITHREID G ULF OIL LP, HEADQUARTERED IN FRAMINGHAM, Mass., is a historic petroleum brand supply- ing heating oil to dealers in the Northeast and Mid Atlantic and developing a rapidly expanding motor fuels distributor network. Taking that a step further, the company has announced the formation of Gulf Electricity. Beginning in Connecticut in March 2012, Gulf Electricity will offer residents and commercial customers the opportu- nity to save as much as 10 percent on the energy portion of their power bills by switching from their traditional utility suppliers. Compared to some high-cost third party suppli- ers, the savings could exceed 10 percent. The service will be offered through multiple channels. These include its fuel oil dealer customers and over 2,500 branded motor fuel outlets including its company operated Cumberland Farms convenience stores. There is no fee to switch to Gulf Electricity. Customers will continue to receive their bills from their current utility, which will continue to handle power delivery and repair services. Beginning in March 2012, customers can sign up with Gulf Electricity in a process that takes less than five minutes NPN Magazineinterviewed Joseph Petrowski, CEO of The Cumberland Gulf Group about this move and what it means for Gulf's partners. NPN Magazine: What prompted Gulf to make this move? Petrowski: One of my responsibilities as CEO is to take a look at strategy within our organization—what are the opportunities and what are the threats. Depending upon what happens with CAFE (mileage) standards, public leg- islation, oil markets—our best guess is that in seven years petroleum consumption will at best remain flat and could be down as much as 20 percent. The industry has been shrink- ing (retail gasoline) sites in the United States for probably 25 to 30 years. And even though Gulf has had tremendous expansion outside of our geographic territory and we're now in 27 states you do not want to rely on that for 100 percent of your future. Markets continue to deregulate and I imagine that eventu- ally we will develop a rather healthy electric vehicle market 10 MARCH 2012 which we may tap into through a series of charging stations. But in the interim we see electricity as a new revenue source we think we can deliver to our customers. We have great expertise in acquiring, hedging and managing commodity price risk. We have great billing and control and we've invest- ed a lot in our information technologies. We have a brand name—Gulf is very well recognized in the energy space—and we have over 1 million customers that come through our Cumberland farm or distributor sites every day. And in some cases we're going to share some of those profits with our distributors in either the motor fuels or heating oil channels. Some of our heating oil customers are obviously being threatened by the encroachment of natural gas and warmer winters and this is another potential rev- enue contact for them with their customers. So if you add it up it all makes sense. NPN Magazine: How is the marketing going to be con- ducted? Petrowski: We will have point-of-sale materials for when someone walks into a store and by FERC regulations we've had to train the people in our stores and stations that will be at the point-of-sale so that they get correct information. What we're hoping to do is steer a lot of people to our web- site where they will be able to sign up and also receive more detailed information including having a calculator to figure out how much money they will save. As to which channel will be the most effective—our stores, our distributors or our heating oil dealers—I don't know. NPN Magazine: What are the savings a customer can expect for switching service? Petrowski: We think our electrical customers will save anywhere from 10 to 20 percent on the commodity portion which is typically about one half the total bill. We think that for the average customer that is going to be somewhere around $150-$200 per year but that will vary. It will depend upon what the current state regulated prices are today and it will depend upon what the free market prices are. And right now free-market prices are falling dramatically because of the warm winter and the cheaper natural gas prices. So in those states where their regulated prices are still relatively NPN Magazine n www.npnweb.com