Imagine 20 years ago in Texas, a young couple moves into their new home. One of the first things they need is an electricity provider. Instead of researching their options and finding the best package for their lifestyle, they realize they only have ONE choice – a monopoly electric utility that provides electricity to everyone in the same way at the same cost.
Things changed for the better in 2002, after the Texas legislature opened the state’s electricity market to competition in most regions of Texas. Since then, competitive market pressures continue to drive retail electricity providers to focus on improving their customer services, customer insight tools and innovative new products and solutions to stay ahead of the competition. Today, many different retail electricity providers offer a range of plans that give you power the way you want it. Literally.
For an overview of what happened after the market opened, and to better understand how plans and products continue to evolve to meet consumer demand, we sat down with Jim Steffes, executive vice president of Corporate & Regulatory Affairs for Direct Energy, one of the largest providers of energy and energy-related services in Texas and North America.
TM: Since the Texas electricity market opened to competition in 2002, what significant benefits have consumers realized?
STEFFES: Choice and pricing are the most significant. With the old way, the only option was “no option.” Now families and businesses can choose the specific service that’s right for their unique wants and needs, whether that’s a fixed price each month, a preference for sustainable sources, or a plan that incorporates some of the innovative new technologies on the market, like smart lighting, sensors, appliances, or the Echo Dot.
As for pricing, the market definitely gives consumers the advantage. If my company doesn’t live up to customer expectations, they can “fire” me. In fact, in the first five years after the markets opened, more than 40 percent of customers had fired their initial provider! That’s competition at work, and that’s why, at Direct Energy, we’re always looking for the best way to provide better plans and better pricing to attract and retain customers. That could include free weekends, buying month to month, having a stable price for 12 months, or other options.
TM: You mentioned some of the new technologies. How might those affect consumers in the short and long term? And what’s next?
STEFFES: There are a couple of big trends right now. One is going from analog to digital. Texas is a leader in digitizing the electric grid with smart meters, and that’s a big win for consumers. Before smart meters, you received one data point every month, and that was when you got your monthly electric bill a couple weeks after you used the energy. Now, with new technology, there’s electricity data available to consumers every 15 minutes. This additional and more timely data helps consumers better understand how they use energy and what the major drivers are of their total monthly bill.
The other trend that naturally followed digitization is awareness of usage. Families now have the ability to cut their electricity bills in ways they didn’t before. For example, Reduce Your Use University lists dozens of actions you can take in everyday life that will help you use less energy. You’re saving money and helping the environment at the same time. Direct Energy can even show usage down to the appliance level — Is it your air conditioning, washer or dryer, pool pump that is using the most electricity each month? Which one is working too hard, is too old, or almost broken? With that kind of detail, you can make informed decisions.
TM: Texas leads the way in renewable energy development. What does the future of that category look like?
STEFFES: Texas is leading the way in offering renewable energy, mainly driven by wind and solar.. In fact, Texas leads the U.S. in wind power, investing over $7 billion in the last decade to build transmission lines to bring wind power from West Texas to the state’s large cities with customers.
Perhaps you have seen the big wind turbines on ranches and farms, and in solar you will see more panels on large tracts of land. But there are also more distributed renewable assets now, like solar panels on rooftops and the use of micro generators for more reliability.
By offering plans that are sourced by renewables, companies like Direct Energy are letting consumers drive the continuation of these innovations by expressing their preference for a more sustainable offer.
TM: The free market for electricity is great, but it means a customer can change providers at any time. What does Direct Energy do to earn and keep its customer’s trust and business?
STEFFES: The company encourages people to be active consumers, so products and services that win customers’ business are constantly reviewed and improved. Every so often, review your plan and go see what else is out there. We know if you find something better, you can switch providers. But we think the energy business is just like other services – your cell phone, cable, car insurance. You want to build up a partnership with a company you know has your back.
Direct Energy helps customers better understand how their day-to-day decisions impact energy usage and bills. By giving customers the insights and knowledge, they need to make smart decisions about their energy usage, customers will remain with us over the years as the company continues to help them on their energy journey.
At Direct Energy, we’re here to answer your questions. If you want to learn more about how to shop for electricity, or have a question about your current energy plan, give us a call. We have a team of experts available to speak with you. One reason we maintain a healthy social media presence, is to engage in conversations, with our customers and receive feedback. That’s crucial in a competitive market like Texas. Direct Energy works every day to be the company to find a solution for you.
TM: What role has the Texas Legislature and the Public Utility Commission of Texas (PUCT) played in making the Texas electricity market as vibrant and healthy as it is?
STEFFES: It’s the policymakers and regulators who gave this market a solid framework that is resolutely pro-consumer. Leaders remained focused on creating competition that still provides certainty and reliability for Texans.
Our legislature in Austin deserves the credit for helping new technologies enter the market. By creating such a vibrant, nimble, competitive playing field, they’ve positioned electric providers to do more research and product development to attract customers. To think of competitive markets another way, providers can only sell what consumers want to buy instead of force-fitting one solution onto everyone at a single, inefficient price.
The PUCT followed in the policymakers’ footsteps in terms of being pro-consumer. They conducted studies and proceedings on electric service and treating consumers fairly and efficiently, and then implemented a statewide Customer Education Campaign so that Texans would know their rights, options and how to use shopping sites for an electricity provider. This enabled Texans to find a plan best suited for their needs. And, the PUCT is always there monitoring the market so that consumers can shop with confidence.
The Direct Energy team believes educated and informed shoppers win. The PUCT ensures that companies live up to their promises, so families can feel confident in shopping for an electricity provider.
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