Transcript Rana Ghosh - Maryland Public Service Commission

Maryland Electric & Gas Supplier Meet and
Greet Conference
June 18, 2009
Rana Ghosh
Sr. Director, Small Commercial
Quick Facts






Direct Energy Business has over 20
years of experience in the energy
industry.
Headquartered in Pittsburgh, PA.
The third largest commercial retail energy
supplier in North America.
Serving nearly 50,000 business
customers across North America.
Direct Energy Business is licensed to
serve customers in 14 states, the District
of Columbia and 5 Canadian provinces.
Direct Energy Business has
approximately US $4 billion in annual
revenue.
2
Our Hallmarks
- Industry-leading products
- Personal, customized
support
- Straightforward,
experienced guidance
- Dedicated to your goals and
objectives
- Experienced advocate in
deregulated markets
- Wholesale market expertise
Part of the Centrica Family

Direct Energy Business is wholly owned by Centrica plc (LSE: CNA), a Global
Fortune 500 company.

Centrica is a major global energy and related services provider with 32 million
customers worldwide.

Centrica plc is publicly traded on the London Stock Exchange with annual
revenues of $33 billion.

Centrica was named number one diversified utility in the Platts top 250 and
was named in the Global 100 Most Sustainable Corporations in the world
index.

Centrica carries an “A-” credit rating from Standard & Poor’s.
3
Our Value Proposition
 Direct Energy Business approaches the small business consumer
with a value proposition based on Direct Energy’s credo of “Simple.
Friendly. Direct”.
 We are committed to provide:
– Straightforward products that support the customer’s ability to plan for and
effectively manage their future energy costs as a portion of their overall
planning.
– Simplified contracts.
– Online web-based portal.
– Accurate and timely customer service, enrolment and billing.
4
Retail Supplier Sales Process
Contact prospective customers through ‘phone book’ lists
Prospect interested? Provide pricing and contract
Prospect agrees and signs contract?
Prospect credit approved?
Prospect
becomes a
customer!
5
Retail Market Challenges
Challenge
Solutions
• Extensive customer education program to
Enhance Restrictions on
Supplier-Customer Relationship better inform customers about retail electric
• Identification of mass market
customers
• Acquisition costs to small
business mass market customers
can be very high using traditional
direct or ‘on the street’ sales teams
choice and alternative supply options.
• Encourage the distribution of mass market
customer lists to better facilitate customer
access and marketing.
• Establish municipal aggregations with “opt
out” provisions to support the ability to
rapidly achieve scale entry and greater cost
efficiencies.
• Utilize telesales and broker channels to
provide coverage without compromising
quality of sale.
6
Retail Market Challenges
Challenge
Solution
Enhance Restrictions on SupplierCustomer Relationship (cont.)
• Implement Purchase of Receivables and
consolidated utility billed programs to
reduce risks associated to bad debt and
associated costs of servicing.
• Servicing and bad debt costs can
make the small business mass market
segment risky
7
Retail Market Challenges
Challenge
Solution
SOS Procurement and
Pricing Design
Shorter Term Pricing for Residential and
Small Commercial SOS
• Utility provides only a “price
stable” product to residential and
small commercial mass market
customers.
• Current wholesale procurement
approach causes retail price to
lag market conditions, making
“competition” between utility
price and retail supplier price
fundamentally inefficient.
• New York, Texas, and Connecticut electric
experience has shown that competitors will
offer price stable products in abundance.
• Quarterly or monthly pricing greatly
reduces risk premiums and credit
requirements.
• Additional benefits, including demand
response, from more current market price.
8
Summary
 Customer retail choice needs to be marketed to increase awareness
of potential cost savings and other benefits
• Reliance on government programs to control costs impacts all tax
payers
 Retail suppliers need further market enhancements to increase scale
and offset the costs associated with the following:
•
•
•
•
Customer Acquisition
Supply
Bad Debt
Servicing
 Direct Energy looks forward to continuing to work with the
Maryland General Assembly and the Maryland PSC to address
these important market development issues.
9