Energy usage is top of mind these days thanks to the green movement, the Obama administration and the overall need to cut costs. What better time for agents to contemplate playing in the energy field as current and prospective customers reevaluate their utilities spend? Why not trade the gigabit or the minute for a kilowatt hour and see how that feels?
Even with a goal of conservation, the world’s energy usage continues to grow. According to the U.S. government’s Energy Information Administration, electricity demand is projected to increase 26 percent from 2007 to 2030, an average of 1 percent per year, with the largest demand growth expected to occur in the commercial sector, accounting for 38 percent of that growth.
According to Vince Bradley, president and CEO of World Telecom Group (WTG), there is a wealth of reasons agents should now consider selling energy. WTG and its corporate umbrella, Commerce Consulting Corp., have been watching the energy market for more than a decade, waiting until the time was right to move forward with an energy division. Hence, Energent (a combination of the words “energy” and “agent”), was born this year as a sister division to WTG. Bradley, who also will serve as Energent’s CEO, said 11 or 12 years ago, when deregulation was just heating up in the energy market, the competitive transition charges, or CTCs, crushed the profitability of agent programs for energy because the incumbents needed to be “paid back” for all of the infrastructure they had established before deregulation. Now, with a double-digit number of states deregulated — 13 states plus the District of Columbia — along with the “conversions of the economic downturn and a movement toward more environmental concerns,” Bradley explained, the channel opportunity in the energy market is getting more attention.
However, Mike Cansfield, principal analyst, telecoms strategy at Forrester Research, believes the crossover would be more difficult than many think. “Telecom companies (or their agents) going into ‘selling’ energy is a non-starter in my view,” explained Cansfield. “This is a highly skilled area and with fluctuating energy costs, this requires a lot of hedging expertise to minimize exposure to risk.”
A lack of expertise is the precise reason agents interested in energy should partner with a provider or master agent who can provide that technical knowledge and support — even better if they are already in telecom and speak the agent language.
Case in point, Bradley feels there are several parallels between telecom and energy. For example, there are two pieces to electricity — distribution and generation. Bradley likens distribution, which is typically not compensated, to a local loop in the telecom industry. Some carriers will pay on it and some won’t. In the energy business, providers really don’t pay on distribution because it is considered part of the infrastructure or delivery mechanism. Generation, on the other hand, is the generation of the energy itself — an agent is paid on kilowatt hours used just as he or she would be for minutes, for example. And also like telecom, there are multiple terms for the same thing — distribution is also called transport, and generation is also called supply.
