Power companies amp up energy management

For all its necessity to modern life, electricity is not an easy thing to sell in Texas.

Dozens of electricity retailers jockey against each other to sell an identical product. Customer service opportunities are limited. Electricity is perceived as a given. And when the power goes out all a retailer can say is call the company that owns the power lines.

But in Texas, power providers are increasingly betting they can distinguish themselves through the mountains of data that have become available since the advent of home smart meters. Just as soda companies traded barbs on taste and calories, retailers are trying to convince consumers of their superiority in analyzing electrical usage to help identify ways to cut back.

“We’ve gone from a world with one meter read a month to 3,000 reads. It’s a data tsunami,” said Jere Thompson Jr., CEO and co-founder of Dallas-based Ambit Energy.

Month after month a new deal or piece of software is announced, advertised as a means to help customers cut their bills.

This summer Ambit announced a program in which customers can track their power use through the company’s website and receive credit if they cut back during times of high demand. Last month TXU Energy, one of the state’s largest retailers, announced that next year it will begin offering customers software to identify how much electricity their individual appliances use.

But how much time are customers willing to invest in tracking their meter? The power companies themselves readily admit that their new software offerings are not likely to appeal to some customers. But in a market where it’s so difficult to distinguish one provider from the next, such technology is becoming critical to stay competitive, said Pavel Molchanov, an energy analyst with Raymond James.

“You need to find a way to stop customers from jumping ship when your competitor offers a penny cheaper rate,” he said. “For years they’ve tried this through programs like free energy audits. The next level of sophistication is to use software to facilitate residential energy efficiency.”

Such programs can cut power bills by 10 percent, if not more, experts say.

The power companies are not giving that revenue up blindly. So-called demand response programs like Ambit’s are targeting usage during times when wholesale power prices are at a premium. A company might spend a dollar to induce a customer not to use a kilowatt-hour of power. But it might have avoided spending $9 to buy that power in the event it failed to precisely predict demand, Thompson said.

What’s more, retailers are looking at energy management as a means to establish relationships with customers. A customer who uses their software, they believe, is less likely to switch to another company next time their contract expires.

“Electricity is traditionally a low-engagement business. People are used to opening a bill, paying a bill and moving on,” said Michael Patterson, a spokesman for TXU Energy. “Our philosophy is making this a personalized experience for every customer. We let them define how they do business with us.”

Follow James Osborne on Twitter at @osborneja.