Eggs, Milk & Electricity: The Future of Electricity Sales?

Posted on Posted in Texas Electricity News

I ran across what I considered to be a fascinating read about what could be the future of electricity sales in Texas. To summarize, the article discusses how in the UK, much of Europe and Australia have been deregulated for quite awhile compared to the still young and immature US deregulated markets. And over there, an interesting trend has occurred: the Electricity companies are partnering with large retail stores to help sell residential electricity.

To put it simply, large retail stores with excellent brands and customer service records have a level of trust that many of the electricity companies themselves might not have with potential customers. Which isn’t to say they’re bad companies, but a new electricity provider that’s been around for 5-10 years isn’t going to match the equivalent of a Wal Mart or Target that people have been visiting their entire lives. Retail Stores might also have more of a history and understanding of successful customer service practices and dealing with the human part of the equation that some electricity providers might not have mastered yet.

This might not be as out of the normal as it appears on the surface. Bundled services are nothing new, even here in the US. For example, lots of companies combine forces to sell products, like Satellite TVs and Phone Service, once upon a time. Hell, some electricity providers here in Texas have started offering satellite TV service bundled with their energy offerings. The point is, this kind of thing isn’t new. Additionally, I’ve seen Green Mountain Energy booths set up outside several of my nearby grocery stores in Houston on a regular basis. We’ve already seen Kroger and other grocery stores start to sell gas at special rates at pumps set up outside there stores. Does Kroger Electricity really seem that far-fetched? Personally, I don’t think so. And I’m not sure it isn’t a good idea. I think it’s only a matter of time before people stop off for some milk, eggs, and a new fixed term electricity plan.

So what do you guys say? Would you buy your electricity from a grocery store or a retail warehouse?

4 thoughts on “Eggs, Milk & Electricity: The Future of Electricity Sales?

  1. Electricity at retail outlets will happen. The only real thing stopping it now is the patchwork network that is stopping nationwide corporations from deploying it. I’m sure you know, WalMart IS a Texas REP. It has set one up to service it’s commercial needs, but hasn’t considered Retail since it’s too small a market to address. I think you’re off base thinking people will be signing up for fixed terms at the grocery store though. The future is prepaid for that market. Just like you can buy a stored value card of any merchant, you will be able to buy or reload money to your prepaid account. With sufficient size, a provider with a large prepaid customer base (or in conjunction with an otherwise stable, diversified load) will be able to project potential prepaid volume to protect this customer from volatility of commodity markets that make for pricing spikes currently. Prepaid will at some point go from a way to deal with high credit risk customers to merely another way to service residential customers. You’ll also see bulk pricing with discounts for high use residences, or small business. Pay $1000 now and I’ll give you a 6 cent rate instead of the 7 or 8 cent rate I’m selling to a traditional pay each month customers.

    1. Everard, you’re quibbling. Lots of companies apply for their licenses to be their own REPs. I know this. You know this. Almost no one else outside of the industry knows this because it doesn’t matter to them. It’s not really an important fact for people to know in regards to whether or not Wal Mart, or Microsoft, or Hewlett Packard are technically their own REP for their own businesses. This is a completely different kind of dynamic than regular people who buy electricity service for their homes. I know you’re a huge proponent of Prepaid Electricity, and maybe that is the future for outlets like Grocery stores and retail outlets. I never said it wasn’t. It doesn’t really change the purpose of the point I am making. Would people be just as comfortable getting it from a partnered business outlet that hasn’t traditionally worked in the electricity space as they would be from getting it from an incumbent?

  2. People will buy what is convenient. I don’t think it’s a matter of people overcoming any particular angst or predisposition they may have regarding where they shop or select a particular good or service. I think in this case it’s for the companies to create the mechanism for people to transact as painlessly for electricity in whatever form necessary to make it easy, seamless and transparent. That groundwork is years away with the patchwork that is the regulatory and infrastructure landscape of electricity in this country. Texas, despite our egos isn’t a big enough market for the folks who could deploy the channel to take it on. The success stories are from smaller countries with a lot more homogeneous infrastructure that facilitated the adoption of the processes and technologies to make it happen. We’re along way from that unless or until a company like Walmart sees the upside outweigh the startup cost, scalability and operability of this channel for electricity. About being a proponent, I’m not, I’m a reluctant participant in what is undoubtedly going to evolve.

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