A pair of startups have begun marketing electricity to Fairfield County homeowners as an alternative to traditional utilities, among several that have entered the market the past three years to finally give deregulation a sturdy foundation in the residential market more than a decade after it was passed.
Norwalk-based Verde Energy USA and Middlebury-based Positive Energy join LevCo Energy Inc., MXenergy Holdings Inc. and Public Power & Utility Inc. among fewer than a dozen alternative suppliers marketing to homeowners.
Since deregulation of the Connecticut electricity markets in 1998, the alternative commercial market flourished, but a robust competitive market for homeowners never emerged, despite numerous companies getting certified to sell electricity to homeowners here.
An exception was Norwalk-based LevCo, which built up a significant number of customers in Fairfield County selling electricity generated by Dominion Retail; and later Stamford-based MX Energy and Brookfield-based Public Power & Utility.
Add to the mix Verde Energy, which received approval in August to sell electricity to homeowners in Connecticut; and Positive Energy, founded last February by Joe Ventura, a former manager with Public Power & Utility and before that Constellation NewEnergy, which only services businesses.
Such companies are able to offer lower prices by purchasing energy supplies monthly, rather than locking into longer-term contracts in the manner of a Connecticut Light & Power Co. (CL&P) or United Illuminating Co. (UI), the two primary utilities servicing the Fairfield County area.
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“We are able to bob and weave on a month to month to basis,” Ventura said.
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That flexibility has not come without the occasional stagger. After natural gas prices spiked in 2005, LevCo was forced to dump 19,000 of its 34,000 customers back onto CL&P after it discovered it did not have enough power under contract to meet consumption needs of its entire customer base. After natural gas prices subsided weeks later in January 2006, the company launched a successful campaign to recoup its customer count within a short period.
Still, Verde Energy says Connecticut consumers appear finally to trust such companies, and Positive Energy says it has grown quickly, building a base of 10,000 customers primarily through the use of independent agents like Alan Steen, a Stamford resident who is among about a dozen the company has relationships with here.
Ventura is looking to add more.
“We get people who peddle electricity and who peddle Avon,” Ventura said. “(Of companies based) in Middlebury, we are the second largest employer after Timex.”
Ventura said he plans to expand Positive Energy into additional markets soon, including New York, and plans to add natural gas to the company”™s portfolio.
Positive Energy and Verde Energy are not the only competitive suppliers to launch in Connecticut this year. So, too, did Philadelphia-based Energy Plus Holdings L.L.C., which like MXenergy is focusing on Connecticut, New York and Texas for electricity sales.
As of August, 208,000 Connecticut residences and businesses were using an alternate supplier to CL&P and UI, according to the Dept. of Public Utility Control, about 13 percent of the total customer base in the state.
For its part, MXenergy lost 18 percent of its residential electricity customer base in the 2009 fiscal year ending June 30, with the biggest losses coming in Connecticut and New York. The company closed the fiscal year with 50,000 retail customers and equivalents, attributing the losses to attempts to cut off some customers that were not making payments, as well as its inability to match pricing and terms of competitors due to restrictions imposed by its lenders. The company said it also had difficulties recruiting marketing personnel in the tri-state area due to a sizeable increase of new retail marketers offering higher commissions.
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“To conserve cash we curtailed certain marketing and sales activities, which resulted in a reduction in sales channels and a reduction in enrollments,” said Jeffrey Mayer, CEO of MXenergy, in a conference call with investors in mid-November. “As a result of that decision we believe the number of new customers acquired during the period was less than what would have been acquired had we continued in our normal course.”
