12 Feb Believing in Tomorrow
By Jack Doueck and John Bastian
The theme for the Energy Marketing Conference taking place in Houston on March 3rd 2020 is “Believing in Tomorrow.” In this article we will explain why we think this is so relevant to the retail energy industry.
Let’s start with what is happening on the regulatory front. Currently there are numerous states that are discussing “re-regulation.” The New York Public Service Commission is not alone in its virtual antipathy towards deregulation and competitive energy.
However, at the same time, there are also a few states that are considering deregulation such as Nevada, Arizona, Florida, Virginia, and South Carolina. It seems to be a long uphill battle to grow the footprint of deregulation in the USA and many suppliers are forced to leave the country to grow their businesses in places like Japan and Europe.
The arguments both for and against deregulation seem to be based on the rate of the commodity to the consumer. The question is: should price be the only measuring stick?
Supporters of deregulation say that utilities are simply monopolies that have little incentive to innovate or operate efficiently. Because utilities’ profits are a function of how much they spend, there is little incentive to cut costs and increase efficiency. As an example, no deregulated state is repeating the mistake of spending billions of dollars on nuclear power, which low-cost natural gas has made a money loser.
Proponents argue that it takes competition and market forces to create a cheaper, cleaner, more reliable electricity system. This is because, in restructured markets, investment decisions are made by entrepreneurs instead of government lawyers, and companies spend money only if they believe there is a market for the products they are building. Innovation happens more quickly because it doesn’t have to run through the gantlet of regulatory review.
Opponents of deregulation say choice hasn’t exactly delivered on its promise of lower prices. In fact, its legacy so far is one of price run-ups and instability.
Because retail competition has basically failed, in general, to produce consistently lower prices, especially for mass market consumers, it’s easy for opponents to simply say, “deregulation is failing.”
So what do customers really want? Is it really all about price?
Numerous studies show that more than anything else, consumers are asking for three things: innovation, transparency and sustainability.
REPs who understand this customer need have an edge in growing their businesses, building their brands, reducing churn, increasing customer satisfaction, and differentiating from their competitors. Focusing on price alone is a losing strategy as everyone is just selling electrons – the purest of all commodities.
Innovation: With full control over billing and payment, energy retailers in Texas have been able to deliver flexible and even customizable options to consumers such as time-of-use, prepay, demand response, free nights/weekends, and others.
Transparency: Studies show that up to 94 percent of consumers say they are more likely to be loyal to a provider that offers complete transparency.
Sustainability: More and more Customers are willing to pay more for sustainable products. In fact, 55% of all consumers are willing to pay more for sustainable products. 73% of Millennials, who have replaced Boomers as the top demographic in the US, are willing to pay extra for sustainable products.
Amidst the confusion and adversity, how can we still “believe in tomorrow”? We can accomplish this by first changing the narrative. We must stop allowing our opponents to control the talking points and the metrics. We have to focus on offering innovative products and services. Let’s become fully transparent with our customers, and improving the digital customer experience. Finally, let’s emphasize sustainable energy and make our customers proud to work with us.
That’s a bright future that we can all believe in.
Please join us in Houston on March 3rd for the biggest event of the year in retail energy! Click HERE to see the schedule.
Jack Doueck is co-founder of LED Plus, Advanced Energy Capital and Energy Marketing Conferences. John Bastian is VP of Business Development of SmartGrid CIS.