Markets: Energy Sector
Energy Providers Power Up
Direct Energy to Expand
Ninth in a Continuing Series
By Chris Cowles
Bob Porter, Direct Energy, vice president commercial/industrial, U.S. growth markets.It doesn’t matter if it’s on the athletic field or in the marketplace, competition benefits everyone.
In the cutthroat business world, so often it is the company delivering the best quality product and service for the price that will ultimately distance them from rivals, especially if that firm develops long-term relationships with clients who have grown accustomed to the value provided.
Such is the focus with Direct Energy which is poised to see growth in Connecticut’s commercial/industrial market.
Direct Energy is the largest non-utility supplier in North America, providing natural gas and electricity to nearly 5 million customers in New England, New York, the Mid-Atlantic States, the Midwest and Texas through its subsidiary companies such as Energy America, WTU Energy and CPL Retail Energy.
Although it has only been doing business on the continent for six years, Direct Energy has realized annual sales of more than $6.5 billion with more than a dozen offices in North America, but the company projects its already-steady expansion to continue.
While it specializes in the commercial/industrial market in Connecticut, Bob Porter, vice president of commercial and industrial sales, U.S. growth markets, says that in the near future, "Direct Energy will supply electricity as well as natural gas, while considering the needs of the state's residential customers."
The firm has done business in Connecticut since 2004, following the acquisition of Albany, N.Y.-based Energy East Solutions’ Bridgeport operation.
“We feel that Connecticut is a very competitive market,” said Porter. “The companies and institutions that have had the opportunity to choose from the fact that they have stayed with suppliers, have switched. It’s an economic benefit to them and we look at it as a ‘win-win’ situation.”
The natural gas market in Connecticut in the commercial/industrial sector exceeds 55,000 customers and in 2004, was worth more than $593 million, compared to the residential market in the state which totals nearly 470,000 natural gas customers and is worth more than $621 million, according to the Energy Information Administration (EIA), a statistical agency of the U.S. Department of Energy. The agency has not yet released 2005 statistics.
Porter sites three areas of strength within the company, first and foremost being that they are part of Centrica, a United Kingdom-based concern with annual sales hitting nearly $35 billion.
“We’re part of the Centrica family,” said Porter. “There is immense strength in that, especially when it comes to our financial stability." The company has a Standard & Poor's credit rating of "A."
"We consider ourselves to be energy advisors. We have experienced work groups who understand the local markets and they constantly look at ways to help manage energy costs.”
Direct Energy has more than 70 people at its Connecticut sales office in Wallingford, and six other sales offices across the U.S.
According to Porter, Direct Energy enjoys a “very high” rate of customer retention.
“Natural gas customers should have a choice when it comes to their energy provider,” he says. “Many have stayed with one provider for many years, but many have switched (to Direct Energy) because it was an economic benefit to them. We look at it as a win-win situation.”
Because natural gas fuels about 40 percent of the region's electric supply, natural gas prices tend to set the region's electricity price. And the price of natural gas has risen significantly, skyrocketing electricity prices as well.
According to the EIA, Connecticut accounts for about 1 percent of all natural gas delivered in the U.S., dwarfed by California, New York and Illinois which account for nearly 30 percent of annual national consumption.
Despite the Centrica link, Porter admits Direct Energy faces challenges as the “new kid on the block” in the Connecticut market.
“We all (energy companies) face hurdles in this business,” he said. “Each of us faced it when Hurricane Katrina hit, but as a company, name recognition is very important.
“Being relatively new to the Connecticut market is tough, but fortunately we have a very good track record, that helps us immensely,” he said.
The most important vehicle for growing the company, according to Porter is direct contact with customers or prospective customers.
“We’re committed to growing our customer base,” he says, “but that only happens with direct contact. Meeting with associations and buying groups, but smaller groups may not have access to information, so cooperatively, we’re working on media advertising and direct-to-client advertising.”
At this point, Porter says the company is mainly concentrating on customers in the educational, governmental and commercial arena, areas he is confident Direct Energy can bring its experience to the fore.
How Direct Energy positions itself is going to critical to future success.
“There are going to be more challenge for customers in the future,” Porter contends. “We have a lot of local knowledge and experience and I know we can share that experience with customers and help them navigate the waters. I think that puts us in a good spot to provide quality service and grow our market.” Porter expects Direct Energy to see double-digit growth in the company and intends to contine adding experts in the industry to their sales force.
“Management is very excited about the growth we’ve shown in the United States and especially in Connecticut and remains very enthusiastic about the market potential,” he said.
