Friday, October 3, 2008

Nice Work, if You Can Get It

I have a business opportunity for you. Wait, wait. Don’t turn the page. This isn’t Amway, Pampered Chef, Southern Living at Home or any of the dozens of network marketing programs out there. (Oh wait. Maybe it is. More on that in a bit.)

No, this is a regular business, with a couple of interesting twists. First of all, you don’t have to produce anything. Somebody else does that for you. Nor do you have to deliver a product. They’ve got people lined up to do that as well. There’s no inventory to stock. And you won’t ever run into a problem with a lack of demand. All you have to do is market this product to people and take their money. Pretty much basic, good-old-fashioned American business.

But wait, as the saying goes, there’s more. Once you sign up customers, you get to set the price for the product AFTER they consume it. That’s right… they gobble up your goods and you get to send them a bill every month with a fee that can go up or down without any notice. What controls the fee? That’s the beautiful part. Nobody really knows. There are several sources for your product, so if any of them raise their rates, you can raise yours, regardless of whether you’re actually buying much from that supplier.

Sounds like quite the racket, huh? You’d think there’d be some government agency that oversees this business and keeps them in line, wouldn’t you? And you’d be right. There is an entity that was created pretty much exclusively to monitor this business. But, since 2002, they’ve been relegated to the sidelines as a spectator.

I am, of course, talking about the power business here in the Great State of Texas. Since the legislature passed Senate Bill 7 six years ago, the electricity business has been “deregulated.” That means anybody can jump into the market as a Retail Electricity Provider, or REP. There are only a handful of companies generating power. And an even smaller number that actually deliver electricity to the TV, microwave, iMac and other life-sustaining devices in your home. But there are dozens of REPs in Texas. At last count, twenty-seven are offering their services to the residents of Frisco.

And therein lies the crux of the issue. Just what “services” do these REPs provide in return for their fees? So far, the only service I’ve seen from my provider is sending me bills with ever-increasing rates. Back in 2002, my wife and I decided that we wanted to be “environmentally conscious” (aka suburban guilt complex), so we signed up for one of the “green” providers when they entered the market. We took it at their word that the energy we were using was being generated by “clean” sources. Of course, since they were buying energy on the open market, there was really no way to be sure. But as far as services, the only thing I got from them was an incredibly confusing “even payment” plan that had me cutting hefty checks year-round, rather than gargantuan ones in July and August.

Then, last year, a good friend approached me with a “new business opportunity.” Yep, those buzzwords had me running for the closet. But it turned out I didn’t have to hold home “electro-parties” to enjoy the low, low rates. So I switched. Nine months later, I’m having second thoughts. (Good thing I didn’t do something silly like signing a two-year contract.) Again, I’ve received no particular “service” from my new provider. What I did get was a rate that went up almost 80% in 7 months. I’d had enough, though, when I saw that their current advertised rate was 40% lower than the one they’d charged me.

Now they had a chance to provide some service. I put a high premium on customer service. Any organization with whom I choose to do business is held to a high standard, particularly those whose only REAL product is their service. Unfortunately, when I phoned their help line, nobody could adequately explain why (1) my rate went up with no notice or (2) new customers would be paying less than me. A few more calls, and some pushing by my “energy consultant” (the friend who sold me on this system) and I’m told I’ll receive a credit on my next bill.

I’m told I could have avoided those price increases if I had “locked in” a rate, by signing a long-term agreement. That is true. But before I lock myself into a relationship with a company, I like to find out how they treat me should things go wrong. In this case, the jury is still out.

So, I’m going to hit the Public Utility Commission’s web site ( and start scoping out some other options. Clearly, the electric business is no spectator sport. You have to get engaged. Keep an eye on energy prices. Sign up for long term contracts when the market is right, or switch providers if the situation warrants. With a little effort - and energy - you should be able to stay ahead of the game. And that is good business.

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