The financial integrity of Texas energy providers is becoming a top concern for customers again after two of the top electric companies reported significant revenue losses related to Hurricane Ike, and are evaluating strategic options, including possible sale of the companies. That makes vetting your electric company more important than ever, and SaveOnEnergy.com provides a simple, independent way to find a reputable, stable energy provider that won't leave customers stranded.
A volatile spring in the Texas electric market saw about eight electric companies exit the business, either by dropping customers to expensive Providers of Last Resort (POLRs), or by selling their businesses to competitors. Either way, customers may have lost their fixed-price electric rates they had originally contracted for.
Changes in how the wholesale market works made for a calmer summer, and it looked like the rash of failures in the electric market had been stopped.
However, that may change due to the devastation caused by Hurricane Ike, which has cost electric companies millions, and has put even the biggest, most well-known providers under a cloud of uncertainty. Energy suppliers have been hurt not only because of lost sales due to outages, but because they bought power in advance to serve customers, then were stuck with that power that customers didn't end up using. Electric companies also had to set up emergency and temporary operations as their offices and employees lost power. It all means that it's been a rough third quarter for electric companies after a very bad second quarter, and the losses are piling on. With credit markets tightening, electric companies have little recourse in looking to borrow to shore up their bottom line.
Reliant Energy, one of the dominant energy suppliers in the Houston area, announced that it is undergoing a comprehensive company re-organization after cutting revenue projections by $350 million due to losses from Ike. The review includes selling to fewer of the largest business customers, in an effort to reduce collateral needs. According to the Houston Chronicle, "renewing commercial customers may have to accept shorter-term contracts or deals structured so they bear more of the risk from changing commodity prices."
Reliant has lost more than half of its stock value since Sept. 15, and investors slammed Reliant for its loss-prone retail business, questioning why the unit is not sold-off so Reliant can focus on owning power plants. Reliant was forced to admit all options were on the table in terms of the future of its retail electric business, though it defended the value of the unit. Nonetheless, many investors would like to Reliant sell the unit.
Both Reliant and First Choice Power are "incumbent" providers for certain parts of Texas, meaning they took over the customers of the old utilities like Houston Light & Power when competition started. Because they inherited customers from the old utilities, many Texans see incumbent providers are more stable or reputable than many of the new competitors that entered the market in 2002. However, with both Reliant and First Choice considering the future viability of their retail energy units, it's clear that customers cannot just assume the companies they've always been with will be around in the next quarter or next year.
Because of the complexity of the electric industry, it's hard for customers to research an energy provider's financial bona fides, especially when many are privately held. That's where SaveOnEnergy.com can help customers by vetting and screening electric companies, to get customers the best rates offered by the most reliable companies. By using SaveOnEnergy.com to find the best electric rate, both residential and commercial customers can be assured their energy provider won't abruptly leave the market and leave customers stranded on a higher rate.