Some Facts about Pennywise Power & Reliant Energy: Part 2
October 19, 2011
In Part One of my article discussing the relationship between Pennywise Power and Reliant Energy, I took a look at how the two separate brands are actually tied together as one company. I also identified why their relationship is different than other REPs in the Texas electricity that have the same energy conglomerates as a parent company. In Part Two, below, I’m going to speculate as to why Reliant might benefit from having a separate brand in Pennywise Power, as well as what it means to consumers in Texas.
Flexibility in Marketing
One guess I might make to the advantage of creating a new REP is marketing. Which on the surface seems silly because Reliant already has every marketing advantage. But take a closer look at Pennywise Power and their message, and maybe there’s another reason. I’ve been critical of Reliant in the past about some of their highly marketed plans that are extremely over-priced compared to the going market rates. Well, one of the reasons I think Reliant can get away with this kind of thing, besides the fact that people don’t read the fine print, is because Reliant can charge higher prices and people will pay because of the perception of their stability and brand recognition. Any company that can charge more for the same product and still get customers would be foolish to not take advantage of that, right?
For example, a brand new REP not affiliated with Reliant could potentially compete at lower prices with the rest of the market without raising questions about how some plans can be offered at much cheaper rates from one place to the other. In other words, why say Reliant can offer a 12 month fixed rate for 9.9 cents kWh, while the same plan at Pennywise is advertised at 9.0 cents kWh (as of the rates listed by both companies on 10/19/2011). And this is despite the fact that Pennywise and Reliant are the same company, with the same officers, and the same addresses. But operating as separate entities allows them to sell the same plans at different prices despite the fact the costs are the same for both companies.
Customer Complaints and Statistics
There’s a common perception in the deregulated electricity space that there is an inherent risk in chasing high-risk customers with low credit ratings. For starters, there is the obvious concern that they might not pay their bills. Some people would also suggest that high-risk customers are also the ones that are most likely to file complaints with the PUC. I don’t know how accurate this perception is, but I do know that many REPs have tried to market to at-risk customers and most usually end up walking away. Some REP’s have moved into the Pre-Paid electricity market thinking it will become an effective way to take the risk out of catering to at-risk customers.
Additionally, PUC complaints and public perception are starting to play a larger and larger roll in how customers shop for their electricity provider. And in my opinion, that is a great thing, not only that more people are taking an active part in the deregulated electricity market but also that REPs are paying attention and being held accountable.
But the thing is, because Pennywise Power is operating under a separate PUC certificate, none of the complaints customers are making are being attributed to Reliant Energy. They all get attributed to Pennywise Power. Which would normally make perfect sense, except for the fact that the complaint contact for both companies is the same person, right down to their identical addresses and telephone numbers listed on each PUC certificate. Other companies that operate with multiple names such as Texpo (a.k.a. Southwest Power & Light, YEP) all share the same certificate, so all the complaints get pooled to the same place. Not so with Pennywise despite, again, having the same officers listed for both companies.
As a result, Reliant could utilize Pennywise Power to specifically market to a riskier customer base that might be more prone to file PUC complaints. And if a high amount of complaints do come across as a result, well, the Reliant brand remains untarnished.
I think this is all pretty interesting. At the very least, the existence of Pennywise certainly lessens the amount of PUC complaints that are filed directly against Reliant, which makes their complaint record look better. Additionally, it might also come into play in regards to their Better Business Bureau rating. Whether or not Reliant is deliberately chasing riskier customers and mitigating the risk of customer fallout in the form of complaints, I cannot say with any certainty. But if that is what they are doing, well, I definitely think it is extremely clever.
Final Thoughts
While definitely a cunning move, perhaps a better question might be whether it is an ethical practice. Reliant/Pennywise certainly aren’t doing anything illegal here. But should it be legal? Why should an existing electricity company be able to start another REP to do the exact same thing, namely sell retail electricity? It’s one thing for a company like NRG, with massive and diverse assets and energy resources, to buy Reliant and Green Mountain independently and let them continue to operate separately. But I think it’s quite another for a specific REP to create another brand out of thin air which does the exact same thing as the parent company (Reliant). And just to be clear, Pennywise was licensed in 2008, a year before NRG purchased Reliant in 2009. So this was a deliberate action started by Reliant, not something put in motion by NRG.
Personally, I think customers should be asking why a company like Reliant would do something like this with Pennywise. What benefit (if any) does it create for the consumers? I personally can’t see any benefits to Texans. But I can definitely see how it can create more confusion, something this market hardly needs. And I definitely question whether a company should be allowed to create shell entities using the same infrastructure without being attached to any of the liability in regards to public perception or PUC complaints.
Again, this is all speculation on my part, but I would like to understand why a company that specifically sells retail electricity to consumers would need to start another company to do the EXACT same thing, using the same infrastructure, the same company officers, but simply a different name. Consumers should be asking themselves what a company like Reliant has to gain using this strategy. What they can’t accomplish as Reliant that they can as Pennywise? And what are the odds that this move is in the best interest of consumers?
And if I am the PUC, who has the responsibility of looking out for the best interests of the customers in Texas, I might want to ask why this kind of separation of accountability is even legal.
Some Facts about Pennywise Power & Reliant Energy: Part 1
October 19, 2011
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.
Texas Electricity Provider Map
September 30, 2011
Last week’s purchase of First Choice Power by Direct Energy was yet another major acquisition of a Retail Electricity Provider by a major energy conglomerate. There’s been around a half a dozen of these deals in the past year, and in my opinion things have gotten a bit muddled and confusing. So I wanted to write a post to chart exactly who owns who in the deregulated electricity space in Texas.
Dominion Resources: Dominion Energy probably isn’t a name that is very recognized by Texas electricity customers. However, they are a huge energy company that deals in both energy generation and distribution in multiple states. Headquartered in Richmond, Virginia, they own the incumbent and regulated electricity providers in Virginia and North Carolina. In Texas, they own Cirro Energy, which they purchased in 2008. Earlier this year, Cirro Energy purchased Simple Power and absorbed their customers.
NRG: NRG, a new Jersey based company, is another huge energy company with massive power generation resources. On top of energy generation plants, NRG also owns Green Mountain Energy, which they purchased in 2010 for 350 million dollars. In 2009, they purchased former incumbent Texas electricity provider Reliant Energy for 287 million and change when Reliant was under heavy financial distress. This was a steal considering Reliant was the second largest REP in the state at the time and has huge brand recognition. In turn, Reliant Energy owns (and I believe operates) Pennywise Power, which is a new brand they’ve put into the deregulated Texas electricity market to try and capture different customers without effecting their core brand. So NRG owns Green Mountain and Reliant, and Reliant in turn owns Pennywise Power.
Just Energy – Just Energy is yet another big energy company, with resources all over North America. They had been a fairly smaller player in the retail electricity market in Texas until recently. Just Energy itself was mostly a niche provider, offering 5 year long term contracts to customers. However, they recently purchased the entire retail arm of Fulcrum Power. That includes Amigo Energy, Tara Energy, and Smart Prepaid. So now all of those brands are part of the Just Energy portfolio. They’ll likely keep the branding and still do business under the names Tara and Amigo, but it’s all Just Energy. Just Energy also owns another smaller REP, Commerce Energy.
Direct Energy: Direct Energy is actually a subsidiary of a British company called Centrica, but they’re known almost exclusively in North America as Direct Energy, so that’s the name we’re going with. Direct Energy is yet another huge energy generation company with huge and varied resources. In the retail electricity space they do business as Direct Energy and they are one of the biggest REP’s in Texas. They also operate in Texas as WTU Energy and CPL Energy in two respective TDSPs. In the Spring, Direct Energy also purchased Gateway Energy Resources for 90 millions dollars. Since then, Direct has removed Gateway as a brand from doing business in Texas. Just last week, Direct Energy made another huge purchase, this time of First Choice Power for 270 million dollars. Which is a huge price tag. So, as of now, every company I mentioned above is really a subsidiary of Direct Energy.
Constellation Energy: Constellation Energy is the largest energy supplier in America. Their 2007 revenues were 21 billion dollars. So yes, they’re another big energy guy. They own the regulated electricity entity Baltimore Gas and Electric. In 2 month period last spring and summer, Constellation announced purchases of both StarTex Power as well as MX Energy, two retail electricity providers that operate in the Texas deregulated markets.
Gexa Energy: NextEra Energy is the parent company of Florida Power and Light, the regulated electricity provider for much of Florida. They’re another big energy company, having generation resources in over 20 states. In 2005, Florida Power & Light purchased Gexa Energy. They still do business in Texas under the name Gexa.
Dynowatt: Dynowatt is a subsidiary of Accent Energy, which is a large company with natural gas ties in Ohio. Accent also serves deregulated New York, but they do business in Texas as Dynowatt.
TXU Energy: TXU is actually a subsidiary of Energy Future Holdings, which also owns Luminant, the power generation portion of the old TXU company that was forced to split because of deregulation laws. Now Luminant and TXU operate separately. TXU is the largest individual REP in Texas and one of the two former incumbent providers.
The following Retail Electricity Providers are stand-alone entities:
Texpo Energy: Texpo Energy is a smaller company operating in Texas. What makes them interesting is that they actually operate under 3 different brand names while all sharing the same PUC Certificate. The other two brands are Southwest Power & Light and YEP. So to sum things up, Texpo, Southwest Power & Light, and YEP are all the same company operating in Texas under different names.
Hopefully this helps to give people a clearer picture about who some of the players are in Texas electricity. It is important that people know exactly who the company is that is supplying their electricity. For example, if someone had a bad experience with one company, they might not want to get service from another one of their subsidiaries. And since there’s been so many purchases and mergings of REP’s in the last 6 months, I thought it might be a good idea to chronicle which companies have ended where after the dust has settled. I’ll try to update this page moving forward as well. I doubt we’ve seen the last of big REP acquisitions, so this family tree might change.
I’ve included a crude flowchart below. Yes, I do realize it looks like it was put together by a 3rd grader.
Texas Electricity: Minimum Usage Charges
August 2, 2011
Earlier this week, I got an email from a Texas Electricity Ratings reader, suggesting I write an article about Minimum Usage charges. We’ve discussed Minimum Usage charges in the past here, but to clear things up, in short, they’re additional charges that are tacked onto a person’s bill if they use less than a certain amount of electricity per month.
The tricky part is that the charges and the thresholds for the charges are different for every REP (Retail Electricity Provider). Which is what the reader asked me about. I thought it was a great idea, and I should have thought of it myself a long time ago. So I ran through most of the major providers operating in Texas and researched to put together a list of the minimal usage charges for each provider, as best as I could find. So below is a guide to the minimal usage charges for Texas electricity.
Ambit Energy: $9.99 for less than 1000 kWh per month
Amigo Energy: Depending on the plan it is $9.95 of $6.95 for less than 1000 kWh per month
Bounce Energy: $4.95 for less than 1000 kWh per month for almost all of their plans, except intro plans are $6.96 per month for less than 1000 kWh.
Champion Energy: $4.95 for less than 500 kWh per month
Cirro Energy: $5.25 for less than 1000 kWh per month
Direct Energy: I couldn’t find a Monthly Fee in their Terms of Service or EFLs
Dynowatt: $6.95 for less than 1000 kWh per month
First Choice Power: $5 for less than 650 kWh per month, plus a $4.95 base charge
GEXA Energy: Seems to simply use a sliding rate per plan for different usage w/o a minimum charge
Green Mountain Energy: Didn’t seem to see any minimum usage charge in the EFL or Terms of Service
Mega Energy: $12.96 for less than 1000 kWh per month
MX Energy: Seems to simply use a sliding rate per plan for different usage w/o minimum charge
Reliant Energy: $9.95 for less than 800 kWh per month
Southwest Power & Light: I didn’t see minimum usage but they had a $7.95 monthly meter fee.
Spark Energy: $8.99 for less than 1000 kWh per month
StarTex Power: $4.99 for less than 500 kWh per month
Tara Energy: $6.95 for less than 500 kWh per month
Texas Power: $10.00 for less than 1000 kWh per month
TXU Energy: TXU uses a base $4.95 charge and sliding rates for less or greater than 1000 kWh, per plan.
Also, I’d like to point out a few other things about the list above. First off, just because I didn’t find a charge doesn’t mean there isn’t one…I just could have missed it looking through the documents. Additionally, all the EFLs I looked at were from plans in the Centerpoint service area. I looked at at least 2-3 plans for each provider to get an idea of consistent charges listed…I did NOT pour through every EFL from every single provider. This is simply to give people and idea of what to expect, and hopefully be helpful. Also, it’s important to note that for the guys that don’t have any minimal usage charge, chances are high they simply tacked it onto their sliding rate scale. But if you find a great price on a guy with no listed charges, then absolutely go for it.
One last note, Stream Energy’s EFL was…weird. Despite advertising their tiered pricing for rates on a 500, 1000, and 2000 kWh scale like everyone else in the market, the fine print of the EFL says their actual tiers are:
The Price is a tiered
pricing structure, based on the following tiers: i) up to 699 kWh depicted in the EFL as Average Monthly Usage of 500 kWh, ii) 700 to 1,499 kWh depicted in the EFL as Average Monthly Usage of 1,000 kWh, and iii) 1,500 to 2,499 kWh depicted in the EFL as Average Monthly Usage of 2,000 kW
So just keep in mind that you have to use a bit more electricity to get to their cheaper electricity rates.
Any questions?
Market Rates: Abilene Electricity & AEP North 5/26
May 26, 2011
Good afternoon, everyone. Our shopping guide entry today for Texas Electricity focuses on the North Texas region, which is serviced by the AEP North TDSP. This includes the prices for Abilene electricity and San Angelo electricity. Compared to Houston and Dallas, the electricity rates in this region are much more expensive for month to month electricity plans, but their long term fixed rate plans are actually reasonable and affordable. And while I’m almost always a proponent of locking in low electricity rates, it makes even more sense in areas like North Texas where volatile month to month rates are already priced at a high premium. The list below also includes both month to month electricity plans along with long term fixed electricity plans. It’s a good place for Texans to start their shopping process.
Month to Month Electricity Plans:
Month to Month Green Electricity Plans:
Long Term Fixed Rate Electricity Plans:
Long Term Fixed Rate Green Electricity Plans:
Cities covered in this shopping guide: Abilene electricity; Alpine electricity; San Angelo electricity; Vernon electricity.
Good morning, everyone. This mornings entry into our weekly series of Texas electricity shopping guide entries is for South Texas, which is the AEP Central service area. AEP Central’s service area includes Corpus Christi electricity and Brownsville electricity. This is the most expensive area of Texas for electricity rates, so it’s important to understand where the market starts when shopping for new electricity plans. The list below is of the most commonly ordered types of electricity plans with the cheapest electric rates. It should help anyone shopping for new electricity providers save money and keep their summer electricity bill low.
Month to Month Electricity Plans:
Month to Month Green Electricity Plans:
Long Term Fixed Rate Electricity Plans:
Long Term Fixed Rate Green Electricity Plans:
Cities covered in this shopping guide: Brownsville electricity, Corpus Christi electricity, Harlingen electricity, Laredo electricity, McAllen electricity, San Benito electricity, Victoria electricity.
Market Rates: Houston Electricity & Centerpoint 5/24
May 24, 2011
Good morning, everyone. Here is today’s shopping guide entry for Texas electricity, covering the Centerpoint TDSP. This includes electricity in Houston and the surrounding areas. The rates for Houston electricity are a little bit more expensive than Dallas electricity, but they’re still much cheaper than the rest of the state of Texas. To help shoppers get a head start on finding new electricity plans, below is a list of the most regularly ordered types of electricity plans in Texas, both short term month to month electricity plans, long term fixed rate electricity plans, and environmentally friendly green energy plans. The list below should be a good place for Houstonians to start shopping and save money.
Month to Month Electricity Plans:
Month to Month Green Electricity Plans:
Long Term Fixed Rate Electricity Plans:
Long Term Fixed Rate Green Electricity Plans:
cities covered in this shopping guide: Houston electricity; Baytown electricity; Kingwood electricity; Sugar Land electricity; Humble electricity; Galveston electricity; Pasadena electricity.
Market Rates: West Texas & Lewisville 5/20
May 20, 2011
Good afternoon, everyone. Today marks our last shopping guide entry this for Texas electricity. Today’s service area is the Texas-New Mexico power footprint, which covers electricity in Lewisville and many other service pockets all over Texas. The electricity rates in this region are between the rates for Houston and Dallas, so while not the most expensive in Texas, it’s still important to understand the price floor and find a good deal to help you save money. Below are the most commonly ordered types of electricity plans with the cheapest electricity prices for the service area. It is a good place to start shopping.
Month to Month Electricity Plans:
Month to Month Green Electricity Plans:
Long Term Fixed Rate Electricity Plans:
Long Term Fixed Rate Green Electricity Plans:
Cities covered in this shopping guide: Lewisville electricity.
Market Rates: North Texas & Abilene Electricity 5/19
May 19, 2011
Good afternoon, folks. Here is today’s Texas electricity shopping guide, this one reviewing the electric rates for North Texas (AEP North). This coverage area includes electricity in Abilene and electricity in San Angelo. It’s important to keep in mind that electricity prices for this region are expensive, so switching electricity providers is a good way to keep your bills low and save money. This shopping guide is a great place for consumers to start that process.
Month to Month Electricity Plans:
Month to Month Green Electricity Plans:
Long Term Fixed Rate Electricity Plans:
Long Term Fixed Rate Green Electricity Plans:
Cities covered in this shopping guide: Abilene electricity; Alpine electricity; San Angelo electricity; Vernon electricity.
Good morning, everyone. Today’s entry into the Texas electricity shopping guide is for the South Texas area (AEP Central). This service area includes electricity for Corpus Christi and electricity for Brownsville. The electric rates in this region are the highest in Texas so shoppers should use the guide below to understand where the market starts and which electricity plans can be considered competitive. The list below is made up of the most common types of electricity plans ordered by customers with the lowest electricity prices, so it’s a great place to start shopping and save money.
Month to Month Electricity Plans:
Month to Month Green Electricity Plans:
Long Term Fixed Rate Electricity Plans:
Long Term Fixed Rate Green Electricity Plans:
Cities covered in this shopping guide: Brownsville electricity, Corpus Christi electricity, Harlingen electricity, Laredo electricity, McAllen electricity, San Benito electricity, Victoria electricity
Texas Electricity Ratings: The Blog 