Just yesterday I emailed out to everybody for the first time in a while about something super exciting like huge EGR upgrades coming soon and today is a totally different story.
If you haven’t already you likely will soon find out about Ambit refunding around $1 Million to some customers in NY and to be frank I’ve been blown away at how emotional people are getting about this… please there is no reason to go jumping off any bridges.
Understandably this is an emotional situation for consultants (especially those in NY) but some level headed perspective is also needed. Many have asked for my thoughts on the matter (and I can promise you they are very different than most), so here they are…
I don’t know what went on behind the scenes.
I have no inside information.
I do have a rather unique perspective…
You see my business partner Damien and I just wrapped up paying off the first of a 3-year settlement (which will total almost 200k by the time it’s all said and done) from a lawsuit in which we were being sued by a state (Texas) appointed receiver (law firm) who wanted us to pay back every cent of commission we earned for selling an insurance based product they claimed (but never bothered to prove) violated securities regulations. The irony of the situation is technically we were being sued by the very company we sold for (since taken over by the receiver) and their argument is that we should have known better than to sell an illegal product (mind you we were selling their product) yet there was never a day in court to determine if the product actually violated anything.
Of course it was all done in the name of “consumer protection.” I could go on about how what really took place was the exact opposite of consumer protection but needless to say politics had a lot to do with it.
For us it was easier/cheaper to settle for half the face value of the lawsuit than to keep shelling out cash to defend ourselves with no guarantee of winning.
The similarities between this and Ambit situation are eerie.
Anybody who remotely knows Damien and I knows we’re not the scamming type, so I hope we’d give Jere and Chris the benefit of the doubt as well instead of jumping to the conclusion that just because they are agreeing to give back $1 Million to customers, they must be criminals. In fact… all solid reason points the contrary.
First off Ambit is not the first company pressured to pay back money, over 3 million has already been paid back by other companies. It is now empirical fact that every company was affected by wholesale price of energy spiking in the winters of ‘12/’13 and ‘13/’14 and this includes incumbents. EVERY company raised rates to compensate which is why the NY PSC “Consumer Advocate” is going after everybody and with Ambit clearly being the largest ESCO in NY it makes sense we were the #1 target. Unfortunately, ESCOs like Ambit were far more vulnerable to the rate spikes and far bigger targets by the “Consumer Advocate” than incumbents who were able to use a variety of cloak and dagger techniques to hide their rate increases within the bills they print and spread them out over a longer period of time.
Secondly there is zero doubt this is a VERY politically motivated situation. Prior to this settlement coming down, Ambit had already met with and complied with the actual NY public utilities commission review of Ambit’s handling of the dual polar vortex situations, this NY PSC “Consumer Advocate” that has pressured many companies including Ambit to refund customers is clearly more politically motivated. To me (purely my opinion) this just smells of a politicians wanting to claim they did something instead of taking responsibility for the many real causes of the situation like the lack of pipelines needed to bring in the amount of natural gas readily available and needed to supply the demand at the time.
Lastly I think we should keep in mind that Ambit has not been charged, sued or found guilty of anything. They are giving back funds due to political pressure and nothing more.
There is no doubt the dual polar vortex situations rocked then transformed the deregulation industry. I would be worried about Ambit’s situation if it were isolated, but we are in the same boat as everybody except we’re bigger and thus it’s going to raise more eyebrows when we get slapped (not that I would even consider this being slapped).
Now on the other hand as many of you know I haven’t been exactly quiet about my opinion that I wish Ambit had handled the dual polar vortex’s differently. I think they could have communicated the challenges infinitely better than they did. I also think they could have been much more proactive on solutions than they were… BUT, I truly don’t believe they did anything wrong or illegal. Considering the field of dead and dying carcasses that is our competition, we’re still the envy of the industry.
This is simply one man’s understanding of and opinion on the situation. Obviously I have a unique perspective since I’ve personally been forced to settle and pay out nearly $200k for a situation I feel completely innocent of. Ambit has been forced to pay $1 Million… comparing settlement size and per capita effect of the two, I figure to be 10x the bad guy many are making Jere and Chris out to be.
If I’m missing some facts or simply have my facts wrong, please feel free to comment below and I’m always happy to correct and update.
Let’s keep a level head about us… all the best my friends!
Sincerely,
Shawn Cornett