Some Facts about Pennywise Power & Reliant Energy: Part 1

by | Oct 19, 2011 | Industry News

Last month I published an article which attempted to illustrate the deregulated Texas electricity market. The point was to connect many of the REPs with their parent companies to give consumers a clearer picture of who all the players were in the Texas market.

Building off of that post, I’d like to take a closer look at Pennywise Power. My main reason for this is similar to my post last month, which is to give customers a greater understanding of some of the ownership affiliations for these REPs. With so many REPs being purchased by other companies, I think it’s important that customers who have negative experiences with one company don’t inadvertently sign up with service from another REP who might have the same parent company. By the same token, a customer who might find a better rate from a partner company where they’ve had a positive experience might feel more comfortable switching.

Which brings us to the focus of this article, Pennywise Power. Why am I singling out them out, as opposed to other companies that have multiple REP’s operating in the market? Well, I do think there’s a difference.

Why is Pennywise Power Different?

First, lets take a quick look at their website. It’s a very straightforward and functional website. It’s not cluttered or confusing, and there are really only a few pages to view, a homepage, a page to view available plans, a customer support page with some phone numbers, and an About Us page. The About Us Page doesn’t give much information about the company, it just reinforces their message on the homepage, which is that Pennywise’s purpose is to be a low cost provider with the mission of getting customers the lowest prices. Their no frills website supports this message. Nowhere is there any mention of Pennywise having any kind of corporate affiliation, which is typical if an REP has a parent company, like what you see on Reliant Energy‘s website, among others.

But again, I reiterate, what makes Pennywise Power different? Well, for starters, their parent company IS Reliant Energy, who is in turn owned by NRG. I find it strange than an REP with such large parent companies would make no mention of their corporate affiliations anywhere on their website, particularly since the ownership chain includes one of the largest retail electricity providers and one of the largest energy generation companies operating in the United States. With that lineage, why would Pennywise Power’s website make no mention of their ownership and instead present themselves as just a small operation trying to appeal to cost-conscious shoppers?

Considering that Reliant is one of the two incumbent electricity providers operating in Texas and by that token one of the two largest REPs operating in Texas, I figure this garners a bit more attention. Particularly since they’ve been a lightning rod for controversy recently and they’re one of the worst reviewed providers on my website.

Breaking Down the Reliant/Pennywise Connection

Big companies operating multiple REPs isn’t a new thing. Fulcum Power previously owned Amigo and Tara Energy. They purchased Tara after buying Amigo because Tara is a niche REP that marketed to a specific demographic, much like Amigo itself. Under those circumstances, it makes perfect sense to keep operating the Tara brand, since it has specific market recognition. That’s probably half the reason Fulcrum purchased them in the first place. Ditto the recent purchase of StarTex Power by Constellation Energy. Or when Florida Power & Light purchased Gexa years back. Same principle.

The chief difference I see with Pennywise Power is that they weren’t an entity with a brand that was purchased by Reliant. They were created entirely out of thin air by Reliant Energy. They weren’t a company with brand recognition or an existing book of customers that was acquired at a good price. They were started from scratch by Reliant Energy employees in 2008. Their PUC license was initially granted to a company called Reliant Energy Services Texas, LLC. This is separate from the original PUC license that was granted for Reliant Energy, which was filed in 2001 under the company name of Reliant Energy Retail Services, LLC. Pretty similar names right? In 2010, the company formally filed to change the name of the the company tied to their PUC Certificate from Reliant Energy Services Texas, LLC to Pennywise Power, LLC. I guess they thought maybe they didn’t want to have their new and fresh brand attached to a parent company named Reliant. Here are links to the respective PUC Licenses, which include a record of their changes over the years: Pennywise Power; Original Reliant Energy.

Also, for the record, if Reliant was looking to separate Pennywise from their parent brand, they might have also considered modifying the information under both Mailing Addresses so all of the company officers weren’t the same people with the same positions and same contact information.

So Why Bother?

So the question is, why would Reliant Energy do this? Particularly since as one of the incumbent providers in Texas, Reliant Energy is already positioned with every possible advantage in the marketplace. They have brand recognition. People who don’t understand the nuances of the system naturally “trust” them because they’re the name they know. They’re bigger than the other guys, they have more money than the other guys, and they’re seen as a stable company that can be trusted. So what is the benefit of creating a new REP with a separate license out of thin air? I obviously can’t answer that definitively, as I have never worked at Reliant and wasn’t involved in whatever meetings took place that led to the creation of Pennywise Power. All I can do is speculate.

In the second half of my article, which I’ll post this afternoon, I’ll take a look at some of the reasons why I think Reliant might be benefiting from Pennywise Power.


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