November 11, 2014 – More Polar Vortex Updates: It’s all coming true…
It took a while in some cases, but as predicted in the original article below, here is an example of an incumbent utility just now raising rates to cover last years losses and prepare for another potentially bad winter…
DO NOT WAIT!
Many are predicting another polar vortexed winter. We are energy CONSULTANTS, let’s live up to the name get our customers either locked/renewed into a fixed rate or guaranteed savings plan so they won’t be shocked this coming winter!
July 9, 2014 – Polar Vortex Updates: Additional Media Coverage…
Since I posted this there have been numerous articles by major new outlets detailing and validating much of what I talked about, most specifically the part about incumbents recovering their losses.
Here are some of the articles I’ve come across…
March 25, 2014 – Original Article: My take on the Polar Vortexed Rates
Over the past several weeks a trickle has turned into a steady stream of emails with reports of unusually and in some cases extremely high rates on recent customer bills in several northeastern markets. It’s not fun to get calls of concern and in some cases panic from customers and I sympathize with everyone dealing with these issues. Oddly enough for years I had always wished I lived in the northeast since it has been the hotbed of growth for Ambit but for these few months while dealing with the “Polar Vortex” affecting rates, I’m perfectly happy living in good old non deregulated Missouri.
Whats going on here?
Ambit did a pretty good job summarizing the basics in their recent Spark blog update you should read here if you have not already. The bottom line is the brutal winter cause major supply/demand issues which spiked natural gas prices to record levels which is having a dramatic effect on the rates our customers are seeing.
How high should we expect rates to go?
Keep in mind we are only talking about plans with a VARIABLE rate which includes all of the following:
- Customers who signed up for a variable rate to begin with (which should never be encouraged)
- Customers who had a fixed rate but let it expire without renewing
- Customers who are on Guaranteed Savings (we guarantee savings but we don’t guarantee the rate will be same every month, the rate on Guaranteed Savings follows market up and down and audit is conducted at end of 12 month period to ensure savings versus the incumbent)
- Customers who were on Guaranteed Savings but let did not renew
On the electricity side, DRAMATIC would likely be the proper word to describe potential rate increases… I’m guessing up to a 100% increase is entirely possible for January. On the natural gas side DRASTIC would likely be the proper word… I expect it’s not entirely impossible for rates to increase beyond 100% for January. February rates should still be worse than historical norms but not nearly as bad as January.
What if my customers are seeing EXTREME rates for January?
I have heard reports of some customers in certain territories such as ConEd, NYSEG & PSEG experiencing rates triple and quadruple the norms. Because we don’t control the billing in any state but Texas, there are several situations where the spiking natural gas rates could have caused a customer’s rate to be exorbitantly high and is due a correction. Although I’m not going to go into the extremely tedious details that could cause such a mistake I was privy to a detailed briefing on the issue and I can assure you that any such exorbitant pricing was not intentional and is purely a result of several bad circumstances coming together all at once.
So… if you are getting reports of rates being triple or quadruple their norms then you should probably email support with a copy of the bill or at least a customer number and explanation so they can review it to see what happened.
Why has the extreme weather affected Ambit’s rates and not the incumbent?
Most incumbents are legally prevented from raising rates immediately. Incumbent rate changes typically have to go through the public utility commission and typically are only changed a couple times a year. The bottom line is that incumbent providers lost major money in January and February and are prevented from raising rates and thus they will be recovering their losses over the coming months and possibly even years, here are some articles detailing this delayed loss recovery process…
The nature of this extreme weather has even caused many incumbent providers to ask for exceptions to be granted allowing them to either raise rates immediately or add a surcharge to help recover costs more quickly, here are some examples…
No matter what, every incumbent will be recovering their losses, it’s just a matter of how long it takes them.
Everyone is in the same boat
It doesn’t matter if you are an incumbent or deregulated retailer, a network marketing or traditional structure… every energy company operating in a polar vortexed area is dealing with the same issues AND the same complaints from customers…
It could be much worse, some companies are closing their doors…
There are even some companies reneging on aggregation contracts and working loopholes to raise rates…
I don’t bring these examples up because I think it will make the situation any easier to deal with. There is no shot or drug that will make this go away, it is probably the shittiest (pardon the French) thing we’ve ever dealt with in the history of Ambit Energy. Speaking of the French, doesn’t it seem they get blamed for everything, why not the polar vortex as well?
This isn’t the first time
It happened before on a much smaller scale back in 2008 in Texas when a major price spike in electricity totally rocked the market. A lot of consultants quit because the situation was more than they bargained for. Plenty of customers left because right or wrong they blamed us. On the other side of the coin Ambit also picked up a lot of customers because there were plenty of ticked off customers from other companies looking for a new home. The same thing will happen this time around, the only difference is that this issue we are dealing with right now is on a larger scale.
Why I’m still all in with Ambit Energy
Having been with the company almost from the beginning, I’ve come to know that Ambit Energy isn’t perfect but even if I could hit rewind and do it all over again, I’d still be here.
I’m here because Ambit has a demonstrated history of consistently competitive rates.
I’m here because Ambit isn’t driven on bait and switch, hype and over-promise tactics.
I’m here because in a growing trend where retail energy providers are not delivering any real value, Ambit’s growing trend is to guarantee it.
I’m here because Ambit strives to be the finest most respected.
Has Ambit made some mistakes, of course… and I’m sure they’ve made a few associated with this polar vortex as well, but I’m confident they’ll own and fix them just has they have in the past.
My advice moving forward
Now more than ever is a reminder that what we do makes an impact on people. We’ve had it so good for so long it’s a harsh reality check when adversity strikes. I know that many people did not anticipate dealing with such issues when getting started with Ambit. Under normal circumstances, this business is extremely low stress and low maintenance.
These are not normal circumstances.
Some companies are going belly up. Some companies have lost hundreds of millions. Some companies are making emergency calls to investors to secure operating funds. Some companies are appealing to the public utilities commission for special consideration. Some companies are freezing dividends.
This will hurt bad for a few months.
I can’t blame anybody for being upset and frustrated by such dramatic rate spikes. I honestly can’t blame anybody if they decide this was more than you signed up for and decide to throw in the towel.
We will get past it and be back to normal while most companies are still reeling. Months from now most incumbents will be just getting around to recovering losses by increasing rates. At the same time, Ambit’s rates will be back to normal and the idea of Guaranteed savings will be one heck of an appealing offer.
The adversity that is causing major headaches now will be the same adversity creating extraordinary opportunity in a matter of a few months. It’s kind of like a pullback in the stock market that knocks the small players out but creates incredible opportunity for the market makers that are all in.
Be real with your customers! Let them know you are not happy with the situation. Heck none of us are! But there is plenty of validation that this is not just an Ambit Energy deal. Educate them on the situation. Not all will stick with you, that’s to be expected. The only thing we can do is be upfront and honest. That doesn’t always mean everyone will be happy with you, but it does mean you have nothing to be ashamed of or feel bad about.
I hope this gives you confidence to stay the course. In case there were any doubt, you now know where mine is still firmly set. All the best my friends!
Ambit Energy National Consultant
Co-Founders Impact Award
Co-Founders Leadership Council
Seven Time 5-Star Club Qualifier
Pacesetter, Powersurge & Pure Energy Award Winner
P.S. A hard lesson learned… It’s never made such a negative impact in the past but as I’ve always taught in my customer training videos, one should never ever ever ever let a customer lapse out of contract! If you are in a guaranteed savings market, make sure your customers are on and renew their guaranteed savings plan. If you are in a variable and term rate specific market, make sure your customers are not on a variable plan and be sure your contract customers renew every term period.