The Role of the Retail Energy Provider
Posted On: January 7, 2011
Posted by Stream Energy chairman Rob Snyder
Energy deregulation is a fairly recent phenomenon in the U.S., with only a handful of states such as Texas, Georgia and Pennsylvania currently allowing consumers the ability to select their power service providers. Given that energy deregulation is still in its infancy, consumer confusion is inevitable -- and especially within those jurisdictions where deregulation is new to consumer markets.
“How does deregulation work?”
“Will my new provider have to rip out my meter and wires, and put in a new set?”
“What happens if the power goes out?”
It’s only natural that consumer questions abound when a market is newly deregulated. For instance, the state of Texas deregulated in 2002: but by the time that Stream Energy and its Ignite marketing subsidiary entered the Texas energy landscape during 2005, only 10% of Texas consumers had elected to switch electricity providers.
As our Ignite sales force canvassed Texas -- talking to consumers and explaining how deregulation works -- we discovered that most people were under the false impression that switching providers was an onerous proposition.
Nothing could be further from the truth. Switching energy providers is, by law, a process that is simple and easy.
Because energy is a life-essential service, consumers tread cautiously. Simply viewing a billboard or a 30-second TV commercial may not be enough to allay consumer anxiety. What was needed in Texas was a customer-facing firm that would take the time to visit with customers in their living rooms, explain the process and answer questions.
Enter Ignite, Stream Energy’s consumer education program.
Prospective customers want to know that, as their potential new energy provider, you care enough to sit down with them, explain how it all works and assure them they will receive dependable service at a fair price. Through our Ignite effort, we quickly realized that the primary role of the retail electric provider in a deregulating landscape was to serve as a customer ombudsman and consumer advocate.
By incentivizing entrepreneurs to explain energy deregulation to consumers within their social circle, our Ignite marketing effort quickly gained momentum in the Texas marketplace. But the key to that momentum is the power of personal relationships.
Our Ignite associates are not unfamiliar salespersons making front porch pitches concerning your energy supplier options. Instead, our Ignite associates are your brother or daughter or best friend -- someone with whom you already have a trusting relationship -- helping you better understand the nuances of energy deregulation so you can make an informed choice.
In the six years since Stream Energy and Ignite began providing service to consumers in Texas, we have grown to become the fifth largest electric retailer in a state where now over 50% of consumers have switched to a new retail provider. Stream Energy is widely credited with being a primary catalyst, as our face-to-face marketing model helped educate the populace about the benefits of deregulation.
We’ve seen other firms come and go that have employed the consumer education model that has been the key to our success. The imitation of our business model simply illustrates the ongoing need among energy consumers for retail providers to be more than simply a logo on a bill; energy companies must act as advocates who help consumers get competitive energy rates balanced with quality service and while caring enough to build and sustain relationships with their customers.
At Stream Energy and Ignite, we have long realized the truth of being a successful energy service provider – it’s all about relationships.