What is the deal with Ambit changing from auto renewal on the Guaranteed Savings to manual renewal?
First off it’s not like this change happened yesterday. It’s been some time since this change was made. Recently though, many customers were harshly reminded of their failing to renew their guaranteed savings plan prior to the polar vortex hitting. Yes if Ambit auto-renewed like they used to it would be much easier for us. Change is never easy; this one seems to have been very tough for those affected.
Oddly enough I never expected it to be nearly as big of a deal as it’s become I guess that’s because my Ambit career started in Texas where renewing your plan has always been the norm so it didn’t seem like a big deal to me and it really didn’t make much difference till the Polar Vortex hit which really got people thinking about rates.
How can Ambit do this, is it legal?
As to the legal/technical question… defaulting to a variable rate after term/plan expiration is the standard across the board practice in the industry with all companies not just Ambit and it is spelled out in the Terms of Service so not only is it legal but it’s the norm, we’ve just not been accustomed to it.
Why did Ambit make the change?
Does Ambit make more money by not auto-renewing the guaranteed savings… yes of course they do because they are not sending out savings guarantee checks to those people. The problem is most people think this is the only reason the policy changed. Here are a few other very real reasons…
- Unfortunately as we’ve experienced there have been periods where guaranteed savings letters and checks have been delayed for months and months and sometimes up to a year or more and this is because there are a lot of unique billing situations (mainly dealing with estimated metering) that create errors (in some territories I’m told this can be as high as 30%) that prevent the yearly audit letters from going out on a purely automated basis thus requiring a real person to manually review each exception and fix it. As you can imagine, this can create quite a headache when it happens on a large scale. This is by no means the official corporate response/answer, but if I’m on the corporate side of things I’m thinking it just doesn’t make sense to allocate resources to do manual reviews to fix all these exceptions for a customer that doesn’t take 5 minutes once a year to renew their plan.
- Out of the people who do end up getting refund checks, there is an astonishingly high percentage of guaranteed savings checks that never get cashed.
- By forcing manual renewals Ambit can much more easily forecast and hedge future energy usage. This never applied to New York because from what I’m told, the way deregulation is structured there makes hedging impossible. But as Ambit saw the future of expanding the guaranteed savings program to other states, I’m sure the idea of at least knowing which customers at least plan on sticking around on a year to year basis is appealing.
My personal guess is that the overhead of fixing all the manual exceptions (for my New Yorkers reading this you know this was and is still a big issue) was what originally prompted it and the money savings was icing on the cake.
Seeing how Ambit has expanded this program to a ton of additional states, it is clearly becoming a bigger and bigger part of our future and as such they needed to streamline it. Renewing plans is the defacto standard in the industry and it just makes sense it would be the same here.
Yes the change/transition to renewing Guaranteed Savings has and will continue to be tough. But again… it’s not difficult to renew! It’s just something that’s not been required before. It won’t be a big deal to all the new consultants and customers unless we keep rehashing what used to be.
Considering how successful Ambit has been in New York with the Guaranteed Savings, we have yet to see a competitor copy it… which tells you something about how difficult it must be to pull off. It took almost 5 years before anybody was able to knock off our Free Energy program. My friends we are still years ahead of the competition. Ambit is pioneering things nobody else has ever done and sometimes working the kinks out isn’t fun, but it sure pays well.
Ambit Energy National Consultant
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