MXpressions

Energy Customer Bill of Rights

2008-05-08T13:11:00.002-04:00

OK. I know i’m developing a reputation as a curmudgeon, a crank, a whiner, a crab, a bellyacher, a griper. In short, a sourpuss. And that’s without consulting the Thesaurus. I could add grumbler, bear, malcontent, moaner, kvetch. You get the idea.

And why have I earned these pleasant monikers? Because I seem to take pleasure in recounting a never-ending parade of consumer nightmares – my own. Nothing makes one more sensitive to consumer rights than being in a consumer service business. Knowing how hard we work to help customers get good service at fair prices – and receive accurate bills to boot – it boggles my mind how oblivious most companies are to the most basic principles.

In this blog I have recounted my unsuccessful effort to snag an extra bag of peanuts on Delta. Of getting documents copied at FedEx/Kinko’s. I’ve even told of one of our Georgia customer’s sad experience of having their gas turned out because they claimed that their MXenergy bill – yes, we drop the ball too sometimes! -- looked like junk mail.

Recently I have added another one to my litany of woe: Showing up at the City Transit terminal in Chicago’s O’Hare Airport.

Here’s my tale. If you’re a cheapskate like I am, and don’t want to take the train from O’Hare to downtown, it will cost you $2 on the train…that is, if you have exact change. You see, the automatic ticket machines at City Transit only take exact change. If you have a $10 bill you must spend it all…or you can walk. Arriving at the turnstile – with my train idling on the platform below -- I asked an attendant at the ticket booth – who does not sell tickets, of course – how to get change. “Walk down the hallway,” he pointed, “and you can get change.”

I sighed. I mumbled. While my train departed on the platform below, I proceeded to drag my luggage in the direction he indicated. About 50 yards away I came to a stop in front of a large picture window with this sign: “Checks cashed here” and then below another sign: “We charge for making change.”

“What?!” I exclaimed. “You charge for changing a $10 bill?“

Being true to form, I could not bring myself to pay a dollar to make change. So I asked where I could buy some breath mints. “In the Hilton Gift Shop,” came the helpful reply. I continued along the hallway – another 200 years with my heavy suitcases – and finally arrived in the gift shop.

Ten minutes later – still dragging my luggage --- I returned to the train platform in time to see the next train leave the station without me.

“Excuse me,” I asked the station attendant. “Why don’t you have a change machine?”

“Oh,” he replied, “They took that out of here seven years ago.”

“And why don’t ‘they' replace it?” I asked.

He shrugged his shoulders.

“I hope you have complained to your manager about this,” I said, “because I am your customer and I am sure I am not the first person to ask you for change over the past seven years!”

At MXenergy we talk incessantly about the “customer golden rule: do unto our customers what we would have them do unto us.” But the rule is about as common as finding $1000 bills lying face up in the gutter. Recently, our marketing team had an inspiration: Why don’t we adopt an Energy Customer Bill of Rights, just like the rights that airline passengers are trying to achieve.

So here it is: MXenergy’s equivalent of the Declaration of Independence, a clear statement of what our customers can expect when they do business with us… or else!

MXenergy Customer Bill of Rights
You have the right to be treated as if you are our most valued customer. Because,
frankly, you are.
You have the right to speak with a real person, quickly.
You have the right to fully understand your bill. If you don’t, we’ll work with you to make sure that you do.
You have the right to privacy – we will not share your personal information with anyone outside the company.
You have the right to switch your service at any time, and we’ll ensure the process goes smoothly.
You have the right to have us listen and work with you to resolve any problem.
You have the right to uninterrupted service. And if your service is interrupted, we’d better have a good reason for it.
You have the right to not be surprised. The rates we quote are the rates we charge.
You have the right to have us help you find the best rate plan – for you, not us.
You have the right to deal with a company that prides itself on ethics, customer service and environmental stewardship.

Making Lemonade out of Lemons

2008-03-19T16:38:00.006-04:00

I don’t want to disappoint fans of my curmudgeonly take on customer service. It has, after all, provided me with loads of entertainment to regale friends and colleagues.

But even I must concede that praise must be given where praise is due. Herewith are what I hope (but fear will not) be a frequent list, Good customer service experiences that deserve hosannas:

The staff of the Transportation Security Administration at LaGuardia’s Delta terminal.

Believe it or not, the x-ray machine ate my scarf a few weeks ago. I had placed my winter coat in a plastic tub at the airport security and had thrown my scarf on top of it. Then I watched it go through the x-ray machine. On the other side, out came the coat, but no scarf. Unfortunately, I didn’t realize the scarf was missing until I emerged from the plane in Chicago. “Oops!” I said to myself, “I must have left my scarf in New York!”

Three days later I was returning from my trip through the same airport. It was midnight. I walked dejectedly over to the TSA guards, sleepily waiting for the last plane of the night to leave. “Any chance you have a Lost and Found for articles lost here? I left a green alpaca scarf here early Monday morning.”

“Of course,” one of the guards said, helpfully. He walked quickly – quickly, mind you – to the TSA office at the end of the platform. There he picked up a clipboard with a log of items that had been left at security. He scanned it and, voila! At 6 am Monday there was an entry: “Long green scarf.”

I was given a phone number and a copy of the log. The next morning I called. The next day I had a Fedex package arrive at my office. I was reunited with my green scarf.

Bravo to the TSA!

The parking valet at Sonny’s Realpit Barbecue in Atlanta.

Even Atlanta can be cold in the winter. And this was a particularly cold day in January. A colleague and I had lunch with one of our large customers. When we emerged the temperature had dropped 10 degrees – it was probably 30 or so, with a blustery wind – and we needed to walk around the back of the restaurant to pick up our car.

We both dreaded the anticipated routine: Give your claim check to the attendant, wait 5 minutes while the attendant finds your key and then saunters at glacial speed to find the car. Then stand another 5 minutes while your car sits behind a long line of other cars waiting to be picked up.

We got to the valet attendant and handed over our ticket. He handed us our keys. The car was sitting at the curb. “Whaaaa?” we each began, confused.

“I saw you leaving the restaurant,” he said, “and I didn’t think you’d want to wait around. So I ran to get your car. It’s cold this time of year!”

Wow! Hats off to you, young man! (On second thought, keep your hat on, it’s cold. Thumbs up!)

My Audi dealer in Fairfield, CT.

So my wife and I leased a lemon. It happens. Of course, we didn’t realize it was a lemon until 13 months after the lease date, just a few weeks after the Connecticut lemon law deadline for asking for another car. Thereafter, the car lived in the dealer’s garage more months than in our driveway.

But we’re not complaining! Why? Because our misery turned out to be an extremely pleasant experience. You see, we would drop the car off in the morning and Carlos, the attendant, would say, “Mr. Mayer, we’ll call you at 3 o’clock and let you know what’s going on.”

And at 3 pm, give or take a couple minutes, the phone would ring. It was Carlos, with a report. “Sorry, Mr. Mayer, we need to order a part. It should be in by Thursday. Would you like a loaner?” The loaner would be dropped off for me at my home.

Of course, on Thursday, the part would not come in. But that was OK. Because, like clockwork, I would get a call! “Sorry, Mr. Mayer, the part has been delayed. But we’ll let you know where it stands tomorrow around 2 pm.” And sure enough, at 2 pm on Friday it was Carlos: “Mr. Mayer, just wanted to let you know the status.”

Go ahead! Surprise me with better service than that. If you’re going to lease a lemon, better to do it with people that serve lemonade!

Kudos, Carlos!

Have a story about great customer service? Let me hear about it. One can’t go through life whining!

Sales Empathy

2008-02-25T11:03:00.000-05:00

Moving energy is a business of details: Not only do we have to keep track of the energy itself – the molecules and electrons that make up natural gas and electricity – we also need to track customer consumption which changes daily (or hourly as in the case of electricity) based on weather and such things as whether Junior has decided to take a shower today (thank goodness!) or Dad has a football game he can’t miss.

And that doesn’t include all the details related to meter reads at odd times of the month, data exchange with the utilities, managing sales and marketing, and then keeping all of our data systems running smoothly. On top of the sheer volume of data is the fact that it all interrelates. A change in consumption affects the supply and the billing. A change in the weather forecast can have huge consequences.

This is why we have a philosophy at MX: Everybody should be a jack of all trades and a master of one. We all have skill sets that are important, but only if we know how they fit into the whole can we truly make a valuable contribution. I am always glad to hear when our people express interest in making a move within the company. This helps spread knowledge to other departments and everybody learns more about how we operate.

Recently, I realized there was another benefit when our people move around, particularly when they want to move into sales. Why? To be good at sales requires that you in touch with a customer’s needs. It isn’t enough to get up in the morning and say, “Today, I’m going to sell electricity.” There are lots of competitors that want to do the same and why should somebody deal with us?

There has to be something more: An interest in and understanding of our customers’ energy needs, i.e., empathy. Our business, like most businesses, is about service first and energy second. Harry Bullis, once the chairman of General Mills, said to his sales people: “Forget about the sales you hope to make and concentrate on the service you want to render.” Our customers want to know that their energy needs will be satisfied, they will be billed accurately, and they will have a fair price. The sale is not what serves their needs; it is the service that meets their needs. When our first objective is to serve our customers, our customers will respond with appreciation.

I find that when our people move into sales from other departments, they are better equipped to understand a customer’s business. After all, they have been in the customer’s shoes within our very own business. If they have accounting experience, they understand our customer is watching his billing and the bottom line. If they have IT experience, they understand our customer wants his information in an easily digestible, reportable format. If they are simply breathing, they understand that good service requires integrity, rapid response and thorough attention.

Our products – fixed rate price protection, carbon dioxide offsets – have always been challenging to explain to commercial customers. It gets a whole lot easier when the MX team members making the sale care about and understand the customers’ needs.

Poor Little Lambs

2008-02-11T17:20:00.000-05:00

“AAAARGHHHH!!!!”

If you were standing outside anywhere in the Northeastern United States last Saturday morning, you would have heard this plaintive cry.

“AAAARGHHHHH!!!”

My wife had just arrived back from her third (in as many days) frustrating visit to Fedex/Kinko’s with a tale of woe. And being the resident cranky, customer service curmudgeon in my own company, I thought I would bring it to your attention.

The story starts in 1970 in Santa Barbara, California, where Kinko’s first started. According to the Fedex/Kinko web site, the first store front “measured 100 square feet and featured a single copier, offset press, film processing and a small selection of stationery and school supplies.” I think of this as the “copier that could.” Within four years there were 72 other locations.

I can relate to this story because those were the four years that I was in college. I remember the little copy center in New Haven on College Street where copies were 3 cents a page and the people behind the desk knew your name when you came in at 6 am after finishing a paper due at 9.

Over the years I spent many a night in Kinko’s. I remember 4 in the morning in Honolulu. I had a presentation the next morning before Hawaiian Airlines. I had gotten back to my hotel room from dinner the night before and learned that there were going to be 10 more people than I expected.

“No problem,” I thought. “I’ll find Kinko’s.” And so I did.

And that night in Baltimore, Maryland, in November 1999. MXenergy was launching its first product – a one year fixed price offer for natural gas to customers of Baltimore Gas & Electric. I was knocking on doors in Lithicum, MD, and the product sold so fast I needed to make more copies of our customer contract.

“No problem,” I thought. “I’ll find Kinko’s.” And so I did.

Or that time I visited a commercial customer with a colleague in Cleveland, shortly after Hurricane Katrina blew in. On the way to the meeting we learned that natural gas prices were hitting all time highs. I wanted to bring our customer a price chart and needed to find a computer…quickly.

“No problem,” I thought. “I’ll find Kinko’s.” And so I did.

Today you can find 1200 stores in 10 countries with 20,000 employees. Actually, Kinko’s calls its employees “team members,” something we do here at MXenergy as well. Which is one reason I always worshipped this company… until recently.

As much as I admire Federal Express, I’m afraid that I must date the decline of my little “copier that could” to the acquisition of Kinko’s by Fedex in February 2004. Fedex is a great company with its own history, dating back to an undergraduate paper written in 1965 by Frederick Smith. Smith recognized a need for a more efficient mechanism for distributing packages. More power to him. He capitalized on a great idea and built an international business that has improved business productivity worldwide.

I don’t blame Fedex for seeing a good fit with Kinko’s. But soon after the buyout I noticed a few things. The hard-working crew at Kinko’s were no where to be seen. Where were the team members that knew your name and remembered your order? That used to exceed expectations every time by having your copies ready hours before they were promised? That used to go out of their way to offer suggestions to improve the look and feel of your presentation?

I wonder if anybody at Kinko’s noticed that I stopped visiting on my out of town trips. It started when I went to a Kinko’s at midnight…and it was closing!

“But…you…can’t,” I mouthed to the employee on the other side of the glass door. “You’re…always…open!” He ignored me.

And then my wife’s experience. She needed to make 100 copies of a program for a theatrical performance she had produced. After waiting in line for some desultory employees to look up from their work, she left a sample to copy. The next day – after even less motivated employees finally found her order – she found the copies had not been made. She came back a couple hours later after having ordered 100 copies, only to find later that only 50 were made.

“But 50 times 2 pages is 100 copies, no?” asked the confused employee.

“No,” my wife explained. “I ordered 100 copies of a two page program which means 100 copies, not 50 copies.”

“AAARRGHHHH!!!”

What happened? Could it be that the entrepreneurial spirit of Kinko’s was crushed out of existence when Fedex moved in?

I remember late one night in the good old days one of the Kinko’s people – an immigrant from Russia, I recall, who worked long hours – told me that she felt like an owner because she held stock options in Kinko’s. She was motivated because she believed that good customer service would lead to more business and more business would lead to more value in her pocket. I understood this kind of motivation because we try to create the same kind of ownership pride at MXenergy, where many team members have the opportunity to own options or stock in our company.

If anybody over at Kinko’s sees this blog entry, I hope it doesn’t discourage them. Great companies can lose their way and still come back. I hope Kinko’s succeeds, with or without Fedex’s help. I still believe in the “little copier that could.”

Meanwhile, I am reminded of the Whiffenpoof song:

“We are poor little lambs who have lost our way,
Baaaah, Baaaah, Baaaah….”

The Last Six Miles: Not Strength but Will

2008-02-04T14:13:00.000-05:00

Sir Edmund Hillary died early this month. He was a childhood hero of mine, one of the first to summit Mt. Everest in 1953 with Tenzing Norgay, his Sherpa. After tackling Everest, Hillary went on to other startling achievements, such as reaching the South Pole in 1958, the first successful overland attempt since Robert Scott’s fatal trip of 1912. His passing started me thinking about the amazing things that human beings can accomplish if they set their minds to it.

Over the years I have had several friends who have attempted to accomplish prodigious feats of athletic or intellectual skill. Their accomplishments may not have been on the order of Hillary and Norgay. But to me they were equally dramatic: Running the 26.2 mile marathon, sailing across the Atlantic, memorizing the Kings and Queens of England, helliskiing in British Columbia, almost climbing K-2 in the Himalayas (28,251 feet), reciting “pi” to 256 decimal places, successfully climbing Mt. Kilimanjaro in Africa (19,300 feet). Until recently I admired all of these feats (performed by different people, of course!) with the detached bemusement of an indulgent uncle, pausing over a picture on a mantelpiece here or reading a long letter in the comfort of an armchair there.

Then recently my family and I decided to attempt our own adventure: trekking four days through the Andes to reach Machu Picchu, the lost city of the Incas. We had never done anything as ambitious – or as insane! We flew to Cusco, the Incan capital, which sits at 10,000 feet. After a couple days of acclimatizing, we set out into the mountains, hiking almost 25 miles, much of it on vertical stone trails set in the mountain over 600 years ago. At one point we climbed a pass at 14,000 feet, climbed down a couple thousand feet and then returned to another pass at 13,000 feet.

For our teenage sons it was a day in the park. For my wife and me it was the most demanding athletic challenge we had ever faced. Physically, we were perfectly fit and had no muscle aches going up or down. But in the thin oxygen at that altitude we found ourselves gasping for breath. Frequently we stopped and questioned whether we could go on. After a minute of deep breathing and slowing heart rates, we resumed, telling ourselves again and again that there was no option: We had to go on. And we could go on, as had centuries of Incans and other Andean natives before us.

We dismissed our hardship to age. Then we heard from one of the 32-year old members of our tour party who had run four marathons. “This was like the last 6 miles of a marathon,” she told us. “You train for 20 miles and then you hit the wall. The last six miles you have to dig deep down into yourself, where you find not strength but will.”

“Not strength but will.” As I sit here looking at the screensaver on my computer -- a picture of my family standing in front of Machu Picchu – I am reminded of both the exhilaration and the pain of that journey. For the first time in my life I feel I can relate to Hillary and Norgay trudging those last few hundred feet to the summit. Or to our marathon friend in those last six miles. Each step must have been agony. But there was no option.

Many times in business we face obstacles that seem insurmountable. In our business we are faced daily with demands for overwhelming amounts of information. After all, energy is a 24/7 business. Electricity is dispatched and balanced every 5 minutes. Our customers are located at thousands of different load pockets and pipeline delivery points around the country. Our supply must be constantly balanced against the instantaneous needs of our clients. The weather is unpredictable and differs in every one of our 38 different market areas. And all of this data needs to be rolled up, captured, reconciled, billed accurately, and reported to our customers, our bankers, our shareholders.

These are intimidating requirements. We have built the infrastructure and have the muscle to succeed. Nevertheless, at times when we launch a new product, or enter a new territory, or pursue new customers, we ask ourselves, “Is it worth it? Can we do one more thing? Aren’t we working hard enough? Wouldn’t it be easier to sit back in our armchairs and watch others on the bloody edge of change and growth?”

“Not strength but will.” Our friend said it all. In our business, as on the summit of Mt. Everest, it is the will to succeed as much as the strength to do so that helps us meet our goals. And when we accomplish our objectives, we feel more relief and satisfaction than pride. Hillary said at the end of his life that he never felt like a “hero,” just a guy doing a job nobody else would do. Not a bad legacy to leave behind, whether climbing mountains or serving the needs of customers.

Nanosolar

2008-01-29T16:00:00.001-05:00

My oldest son has been subscribing to Popular Science for years. When he was in high school I heard about the latest technologies third hand; the magazine disappeared into his room as soon as it arrived. I never got to read for myself about solo powered air flight, electric cars, and nanorobots. Now that he is off to college I get to read it myself. It is like reading a science fiction novel but it’s real: New gizmos and gadgets that would make the Jetsons take notice.

One perennial topic is solar power. Now I’ve been watching the development of solar panel for years, at least since I was in high school myself and clipped a solar cell to a bulb from a flash light and got a dim glow. The past few years have been particularly interesting. Several months ago I was invited by one of the investment banks on Wall Street to hear from the entrepreneurs on the cutting edge of this promising technology. They talked about new breakthroughs in materials science and design, but all delivered essentially the same message: We can produce power from the inexhaustible rays of the sun, but it will be many years before the cost of solar power is competitive with electricity from conventional sources. Translation: Give us some more investment tax credits and give our customers some tax incentives and we can do more.

So nowadays when I see a story about solar power I usually yawn. That is, until a couple days ago. A story in the Sunday New York Times caught my eye: “Start-Up Sells Solar Panels At Lower-Than-Usual Cost.” Now I’ve heard this claim before so I scanned the article quickly with the intent of going on to something else. That is, until I saw the “Lower-Than-Usual Cost”: $1 per watt. Whoa, I said to myself. That’s cheaper than a new coal plant!

It appears that a new company in California called Nanosolar has been launched with backing by some Silicon Valley sponsors including some of Google’s co-founders, according to the story. The company has built a factory which, it says, prints photovoltaic material on aluminum backing, reducing the cost of solar panels by more than 80%. In other words, with this technology solar power can produce cost effective energy for the first time since Prometheus stole fire from the hearth of Zeus. (Let’s face it, can’t get it much cheaper than stealing it – not a good thing, mind you, but it sure beat freezing in those long nights on Mt. Olympus.)

I haven’t been able to stop thinking about Nanosolar’s new idea. It has the power to truly change the world. Sure, solar power cannot supply all of our power needs, unless we all plan to move to the Mojave Desert and go to sleep each night at dusk. But imagine if solar were efficient a mere 10% of the time. That would be enough to provide all the electricity we need to grow for years, certainly until new nuclear power plants are designed and developed. In the meantime, it could reduce our current dependence upon fossil fuels, thereby reducing harmful carbon dioxide emissions from natural gas fired generators and sulphur dioxide emissions from fuel oil and coal plants.

I used to like science fiction as a kid. Jules Verne’s “Trip to the Moon” was fiction until it became a reality. Isaac Asimov’s robots were fantasy until they appeared on the General Motors assembly line. The Jetson Family’s solar powered home was a cartoon…until Nanosolar. As one who lives and breathes energy on a daily basis, I feel like a guy riding on horseback when Gottlieb Daimler passed in his automobile, lurching and backfiring over the rutted road.

Now if I could only get my hands on one of those solo powered aircrafts.

Customer Care from the New York Times

2008-01-07T17:07:00.000-05:00

I was rummaging around in my brief case for a pen when I pulled out a yellowing article from the New York Times. http://select.nytimes.com/2007/06/27/opinion/27friedman.html I had clipped it several months ago on a business trip. I intended to send it to our Customer Service Teams in Maryland and Florida. It was written by Thomas Friedman for the Times’ Op-Ed page. I had forgotten to write the date on the clip so I can’t be sure when it appeared but hopefully it was over the last year or else it means I haven’t cleaned out my brief case in quite a while!

Mr. Friedman is an astute commentator on everything from Middle East politics to globalization. In this story he recounted standing in line a couple years earlier at Boston’s Logan airport. He was buying a newspaper when suddenly a woman stepped in front of him and insisted that she be served first. He was incensed, but then woman turned to him and said, “I know who you are,” and so he backed off.

“If that happened today,” he wrote, “I would have had a very different reaction. I would have said: “Miss, I’m so sorry. I am entirely in the wrong. Please, go ahead. And can I buy your magazines for you? May I buy your lunch? Can I shine yours shoes?”

Why did Mr. Friedman say he would have been so eager to please the woman? Because today the woman might have whipped out a cell phone from her purse and, when he was protesting her rudeness, filmed the entire episode and posted the clip on YouTube!

Mr. Friedman – always with an eye to the global implications of everyday events – points out that in a world with instantaneous communications, we are all constantly on stage. Our attitude, demeanor, mood and tone of voice is not ephemeral as in the past. Rather, everything we do could become a permanent part of the collective consciousness. And while sometimes the global archive might be accurate, just as often the behavior that we take for granted can suddenly appear in a sinister and unflattering light.

This is important insight for every company in a customer service business. I am delighted to report that when customers call me directly, they may have complaints but they almost never tell me that our agents were rude or abrupt. That is because we train and coach our customers to “speak with a smile.” Believe it or not, you can “hear” a smile over the phone. Courtesy is not only good business practice. It’s also playing defense. After all, suppose the call is recorded?

Emails raise a similar risk. Say something nasty and write in capitals – i.e., shout – and the email may end up forwarded to a million readers by the end of the day. My personal hangup is typos. Write to somebody: “Yank you tor your bery nice Christmas tift” and you sound like you’re drunk and out of your mind.

Fortunately my blogs have a limited shelf life and are forgotten as soon as they are read….or are they??

Electricity on eBay?

2007-12-21T09:29:00.000-05:00

I love working with people who won’t take “no” for an answer.

When one of our team came up with the hairbrained scheme of putting a megawatt of power up for sale on Ebay, I suggested he may want to take a walk around the block for some fresh air.

Don’t get me wrong: I don’t believe there is any such thing as a bad idea. But how are we supposed to deliver a megawatt of power to a customer on Ebay? What if the successful bidder lives in Alabama and the power we sold delivered in CT. (Some wise guy actually wrote to us asking if he could “wheel” the power to Oregon. “Wheeling” is a term of art in the electricity business so we knew he was pulling our chain. To get the electricity from Connecticut to Oregon would require doing bilateral deals with a couple dozen utilities and Independent System Operators from coast to coast, including crossing the continental divide with a phase shift somewhere around western Nebraska.) And how were we going to bill for this little megawatt, especially when the average customer uses about 10 megawatts a year, and not all of it is consumed at the same time? What if the customer agreed to pay us more than a megawatt was worth -- $119 in United Illuminating’s Territory?

Long ago I learned that before I let myself say “no,” I needed to come up with a few creative answers. So I stopped myself in mid-track and started to think to myself, “This is a cool idea. We can figure this out. We can explain in the offer that the electricity is only available in UI’s territory in Connecticut. If a customer wants to pay more than it’s worth, we can give the balance to charity. And if our customer pays us for one megawatt today, we can simply credit our customer with a megawatt in their first bill."

So we launched the auction on Thursday, December 6th. Within hours we started receiving calls from the press. On Friday morning I was asked for an interview by the Associated Press. The phone rang when I was on my way to Penn Station in New York to catch the train to Maryland for the annual Christmas Party of our Customer Call Center. I stood in the middle of Fifth Avenue with my suitcase in one hand and the cell phone in the other, being jostled by holiday shoppers. The reporter wanted to know how we were going to deliver the megawatt to Alabama, what we would do if the bidder wanted to pay more than it was worth, when we would credit the megawatt if they used power all year long. I was prepared with the answers.

That night, as I enjoyed a slice from a long chocolate cake in the form of a yule log, I felt the phone buzz in my pocket. It was the text of the Associated Press story. By now it had run in dozens of papers around the country. A few minutes later I received a call from my son in Connecticut. He had just arrived home from college. “Dad, I was driving home from the airport and I heard on CBS radio that you were selling a megawatt on ebay. Cool!” It was the ultimate accolade.

Heating Oil Trades at Record High

2007-10-26T10:01:00.000-04:00

Current forecasts call for a continuation of warm weather for the remainder of October and the expectation of a colder winter than last year. While the weather outside this week was anything but frightful, whether the winter will actually bring flurries, blizzards or both is anything but predictable. As we evaluate energy solutions that address this winter and the next, a famous saying from Ralph Waldo Emerson comes to mind: “we all become experts in geology the morning after the earthquake.”

Last week, the leading index for crude oil traded above $90 per barrel for the first time in history. This week, crude oil traded off during the first half of the week and has rebounded following inventory reports from the U.S. Department of Energy (DOE) which surprisingly decreased by 5.3 million barrels. While domestic refinery production fell by 0.20%, the most significant reduction was due to a drop in imports of 1.3 million barrels per day.

As a result, contracts for heating oil are trading at record high levels—up more than 40% since the start of the year. According to the DOE, consumers in the Northeast who rely on heating oil to fuel their furnaces will spend an average of $1,785 during the winter season versus $891 for households that rely on natural gas. MXenergy offers fixed price agreements so that natural gas and electricity customers can limit their exposure to monthly price fluctuations and the kind the volatility recently experienced in the heating oil market. Natural gas prices are low compared to crude oil and refined products such as heating oil. Now is a good time to take a hard look at your budget and consider fixing your price. Don’t fall victim to what, T. Boone Pickens, the legendary Texas oil and gas businessman calls the ready-aim-aim-aim-aim syndrome.

Ample supplies of natural gas in storage and the absence of a Gulf Coast hurricane have kept natural gas prices at bay. Thus far this year, the highest recorded contract settlement for Gulf Coast natural gas was $7.59 per MMBTU and occurred in June. In the prior year, the June contract for Gulf Coast natural gas closed significantly lower at $5.92 per MMBTU. Even during a year surrounded by the best of circumstances it only takes a ripple of expectation regarding a tropical storm or a global conflict to have a meaningful impact on prices.

In the absence of new information, it is likely that the November Gulf Coast natural gas contract will settle on Monday at a level below the June peak. If this scenario plays out, it will mark the fifth time since 1990 that the June contract settlement exceeded that of November. For many of us who use natural gas to heat our homes and facilities this is a nice break in prices when we need it most. With natural gas bills expected to be almost half those of home heating oil bills, we are committed to keeping our customers informed and providing the energy products that help keep costs in check.

Have a great weekend and enjoy the weather.

Dollars for Doers

2007-09-04T14:28:00.000-04:00

From Irene Moser committee chairperson for MXenergy’s Dollars for Doers program:

As program director of MXenergy’s charitable giving committee, I face the constant challenge of encouraging my colleagues to volunteer. It’s not as if people don’t want to volunteer. It’s finding the time between long hours at work, family, pets, friends....well, you get my drift.

Months ago we formed a charitable giving committee. Companies like ours are often solicited to make donations, but it’s hard to pick and chose which charities to support. You can’t say “yes” to every caller, and yet if we decided to favor some causes over others there could be complaints that we were being selective or discriminatory. To avoid this, we decided that MXenergy should support charities that our colleagues actually worked for. If any of our fellow team members could demonstrate that they contributed a minimum of 20 hours of volunteer time each year, the Company will make up to a $500 contribution to that charity in the team member’s name.

I am delighted to report that before long folks were volunteering. But how do we get more members of the team to commit?

The Committee decided it would not only be morale boosting but even a bit competitive to hold a contest! We thought we’d give out a little cash or what we called a “voucher” ($150 Amex check). We thought what better way to use this voucher for babysitters, a nice dinner with your significant other or maybe even to pay for your dog to finally get groomed!

So off went our contest rules to the team. The first person to rack up 25 hours of volunteer service wins the voucher. In only four days I received an email from Pat Kelly. I couldn’t believe in one weekend she earned the 25 hours of service winning the contest. We were all thrilled. But now the kicker....

Pat didn’t want to use the money on herself! She chose to put it right back into the charity in which she volunteers. The charity is called “Volunteer Ambulance Corps.” Pat is in volunteer emergency medical service: Responding to medical emergencies within the Pasaic Valley Area.
So when Pat came to me for the voucher of course I had to ask her, “Pat, why not a nice dinner or a dog groom?”

She said, “Irene, the Ambulance Corps is in desperate need of a new ambulance. The one we’re using is adequate and well cared-for, but we could be doing much better work with a new rig.”
My hat goes off to Pat Kelly for her dedication to her charity and resistance to a new pair of shoes!

And if Pat’s dog looks a little scraggly…well, it’s all for a good cause!

Mabel

2007-08-29T16:16:00.000-04:00

So I’ve been thinking a lot about Mabel. Mabel, you ask? Let me explain.

On Wednesday I spent the day in our New Jersey natural gas supply office. It was our annual winter post mortem. Since 2000 we have been holding these day-long sessions, deconstructing the prior winter’s gas supply picture.. Winter gas supply is an art form, requiring constant attention 24/7 --including, mind you, Thanksgiving afternoon and Christmas morning and New Year’s Eve. Every summer we look back at the prior winter and review how successful we were in meeting our customers’ needs during the summer, moving gas in and out of storage, and responding to weather emergencies and pipeline congestion. In our first meeting seven years ago we discussed supply behind a single utility, Baltimore Gas & Electric. That was where we served our first customers in December 1999. Now we serve natural gas to customers behind 29 different utilities. The analysis is a bit more complex. But we’ve become smarter about our business and the “to do” list for next winter has shrunk to a couple pages.

Now back to Mabel. During our meeting one of our most experienced natural gas schedulers – no, her name is NOT Mabel -- observed that we are deluged each day with notices from all the utilities we serve. She explained that in the past we would go through the announcements in the order in which they were received. Since many of the notices are routine, this process worked pretty well. Unfortunately, once in a while a notice can be a real zinger. It may contain urgent information about, say, an interruption of pipeline capacity or a critical weather event that results in a spike in gas demand. Because the notices all look alike, the process of going through the notices in order of receipt may result in our missing an important one.

In fact, this happened last winter. An important notice came out late in the day. It was more urgent than others. It reported that pipeline flow had been interrupted in Appalachia and we needed to find replacement supplies for our customers in Ohio. Because the announcement was preceded by so many other notices, we didn’t get to it. At least, until it was too late. Then, we had to scramble to cover the shortage in supply.

To correct this problem, our scheduler came up with an ingenious solution. From now on, she said, we will review each notice through a “triage” system similar to what is used in a hospital emergency room. If the notice is important, it will be dealt with immediately. If not, it will be left for after hours.

“Eureka,” I said. “Ingenious. You faced a problem and in stead of continuing to do it the old fashioned way you came up with a new approach.”

And that got me thinking about Mabel. Remember when Alexander Graham Bell spilled acid on himself and yelled into his new invention, “Watson, come here! I need you!”? Within a few years, telephone lines connecting offices and homes were laid out. Down at the country store, or in the basement of the building, an operator stood ready to connect dialers. Her name was Mabel. “Operator, can I help you?” she asked.

At first, Mabel had, say, 25 phone lines to work. Then 50. Then one day Mabel came to work and there were 250 lines and she didn’t have time to say “Can I help you?” and pretty soon she didn’t have time to say “Operator.” She was moving so fast she was on the verge of a nervous breakdown. I suspect her boss came by and seeing Mabel working up a sweat said something like, “Mabel, tell you what I’m going to do? I’m going to get you some help.” And so the boss probably hired another Mabel. And when the two Mabels couldn’t take it any more they hired two more Mabels. Then four more. Then eight more.

Until one day somebody came alone and said, “This doesn’t work any more. “We can’t hire any more Mabels. We need an automatic switch.”

That’s the way it is with our business. We start out doing something and as our business grows we do more of it. And then one day one of our smart people says, “THIS DOESN’T MAKE SENSE ANY MORE.” And we change.

Thanks for the memories, Mabel. While it would be nice to find you on the other end of the line now and then, I do enjoy getting a dial tone when I pick up the phone!

Lending Crisis

2007-08-17T10:25:00.000-04:00

“Stocks Plunge as Subprime Losses Take Toll.” “Schools Steer Students to Backbreaking Loans.”

When business stories find their way to the evening news and the front pages of the morning papers you know you have a problem. That’s where we’ve been reading about mortgage companies that sold expensive mortgages to low income borrowers and about companies bribing college administrators so they can take advantage of students looking for tuition loans.

These stories are burning me up and I’ll tell you why. Each of them involves companies – reputable brokerage firms on Wall Street and hard-working mortgage brokerage firms on Main Street -- that got seduced by the quick fees and easy profits. All they had to do was convince borrowers to sign a few pieces of paper to buy a house or go to school. And all their salesmen had to do was sit across the table from eager borrowers and tell them how much money they were going to lend them.

Trouble was, many of the borrowers had no business taking out the loans. Sure, many people benefited from access to the loans; probably a lot of young couples buying a first home and students striving to be the first in their families to get a college degree. But many also were elderly couples on fixed incomes and students without any income at all. Sure they got the money but they didn’t know what they were buying. I read in the paper the other day about a woman who thought she was buying a fixed rate loan when she had really bought a variable rate loan…before interest rates started going up.

Early in the last century, stockbrokers persuaded millions of Americans to buy stocks on credit, that is, to borrow the cost of the stocks on the theory that they would pay back the loans when the stocks went up in value. Then came 1929 and many of these investors found they had worthless paper on their hands and no way to pay off the loans. The result was federal legislation that prohibited the purchase of stocks with more than 50% borrowed funds. When you buy stock today you’re not exposed to the risk of instant bankruptcy if the stock market gets walloped.

In the commodities world, when MXenergy buys three years of natural gas or electricity supply for its customers it must have sufficient capital to meet its obligations. After all, our customers don’t pay us for months after we deliver their gas or power. We maintain a strong balance sheet that gives our suppliers and our bankers the confidence that they can deliver energy and credit to us and that they will be paid. These kinds of rules help make sure that people – and companies -- don’t get overextended.

Wall Street probably had it coming. Like they say, “Summertime and the living is easy…” But then there is, as Shakespeare said, the “winter of our discontents.” Let’s hope that before next winter Congress can do something to make sure that lenders can’t sell – and borrowers can’t buy – products that may not be good for them.

Walter Reeves - MXenergy's New Georgia Spokesperson

2007-08-15T15:59:00.000-04:00

If you're lucky enough to be in Georgia you can now see the first of MXenergy's fall TV commercials. Walter is an expert in Georgia gardening and a great extention of our brand - he's also an Earth Friendly Partner!

Here's the commercial for those of you outside of the viewing area.

Mrs. Calabash

2007-08-13T15:20:00.000-04:00

I used to have this old record (that’s right – vinyl, 33 1/3 --NOT 78, wise guy) of Jimmy Durante singing “Young at Heart.” Come to think of it, it may have been a 45 on a single with “Time Goes By” or something like that on the other side. Durante’s voice is rasping, like a 64 Mustang starting up. But when you hear that voice all the gizmos of modern life disappear from sight and your vision goes black and white. You’re curled up in front of a roaring fire with your hands wrapped around a cup of hot chocolate. And you’re thinking of every long lost friend and relative when Jimmy utters those immortal words at the end of the song, “Good night, Mrs. Calabash, wherever you are.”

Sorry to say, but next time I hear the song I may also start thinking about one of our customers. How many times does a CEO in our country receive a letter from somebody who is practically begging to be a customer? I got one a couple days ago and frankly I’m feeling a bit depressed today when I think about it. The letter was from Georgia and was typed neatly on a single page. It was beautifully written, patient and thoughtful in its message. It said:

“I tried to enroll for new service with your company. The customer
representative…was as helpful as she could be. She made a three-way call
to my husband who was away at the time, whose name the account would be under,
to get approval for the credit check. Upon doing the credit check, she
came back and said we were denied. My husband proceeded to call [the
Credit Agency]” which “told us we did not have enough ‘open credit’. There
was not a credit problem; we could pay the monthly bill. I proceeded to
call your service center back and asked if the monthly bill could be taken out
of a credit card account or a checking account. I received the answer of
no. Once [the Credit Agency] denies you, you’re denied.

“Do you not want new business? My husband and I are not
credit risks. I understand you have to be very careful these days who is
enrolled for service. My husband and I seem to have fallen through the
crack on this policy… I still would like service with your company.
I thought you should know that this particular policy is losing your company
business from people in my family’s situation.”

I handed the letter to my assistant and said, “Let’s sign up this customer asap.” Within minutes we had contacted the customer service center, which is located in Florida, and then contacted the letter writer by phone. Unfortunately, the next day I received the following email:

“As a follow up, we were able to finally contact [the Customer]. She advised that she … will not go with MXenergy unless we change our policies. We did advise that we were willing to enroll her but she stated that she thought the policy should be changed and not just for her.”

I hope Mrs. Calabash sees this, wherever she is. First, I want to thank my correspondent for contacting me. Her concern was reasonable and I am glad she brought it to my attention. Second, I want to applaud her for standing up for other potential customers who might be in a similar situation. Unfortunately, she was correct in her letter when she said “you have to be very careful these days who is enrolled for service.”

Each month we deliver tens of millions of dollars worth of gas to customers around the country. Often we do not receive payment until over two months later. It is only prudent for us to be very cautious about whom we serve. If we have many customers who do not pay us for the gas we deliver, we would have to charge all other customers a surcharge to cover the cost of the bad debt. The result would be that our loyal and reliable customers would pay a premium for non-paying customers. A credit policy helps all customers.

But a credit policy also has to be fair. That is why we are constantly reviewing our credit standards to make sure they are not too stringent or too lenient. We will certainly do that in this case. Hopefully in the near future we will have a policy that addresses the situation here of a customer that is clearly a good credit but may have missed payment of a couple bills.

But it’s late. And even though it’s 90 degrees outside and I’m not interested in hot chocolate, I’m still in a mood to listen to Jimmy Durante. So… Good night, Mrs. Calabash, wherever you are. And thanks for writing…

Opportunity Cost

2007-08-09T17:46:00.001-04:00

Recently a friend asked me to meet an acquaintance who was in the energy business. “He’s really smart,” she said, “and he’s been selling renewable energy for a company in Ohio. I think you’ll like him.”

We met for lunch. I instantly liked the guy. Often when people with potential business opportunities come in, they ask “What would you like me to do?”

“That’s the wrong question,” I tell them. “You tell me what you would like to do and then ask me if we’ll support you.”

At that point I rarely hear from them again.

This conversation was different. He told me about some environmentally friendly energy products that he sold – florescent light bulbs and solar polar cells, for example. Then he told me about some distributed generation units he wanted to sell, such as co-generators that produce electricity in high priced states like New York and Massachusetts and give off steam as well to heat or cool office buildings. Then my new friend added, “But your business is a no-brainer. Can I help you sell it?”

“What do you mean,” I asked in amazement.

“Well, the way I see it,” he began, “Energy prices are the most volatile in the world. They’ve come down recently because of a warm winter. But that will change because the world has an energy shortage. So therefore commercial customers should be buying your product like hotcakes.”

“Well, they should be,” I answered. “But they’re not.”

“Would you let me approach a friend who has a hundred or so chain restaurants?” he asked. “He’d be crazy not to lock in his prices. After all, if prices go down, that’s opportunity cost but it’s not a real loss. But if he does not lock in his prices and prices go up, he’ll be hurting.”

Point, set, match. I couldn’t have said it better myself!

YOUBETCHYA!

2007-08-06T17:42:00.000-04:00

We were talking recently about marketing in Brooklyn. I confess I have a soft spot in my heart for Brooklyn. For one thing, it would it be the fourth largest city in the country if it were an independent metropolis and not a boro in the city of New York. For another, I was born there. To me Brooklyn conjures up images of baby strollers on Ocean Parkway (black and white picture in an old album). Of the Coney Island parachute jump and Ferris wheel. Of hot dogs and an old Dodgers cap a relative gave me.

So I got to thinking: How do we get across to my friends in Brooklyn that energy prices are close to a three year low and probably won’t stay here? That energy prices remain extremely volatile and are more likely to go up than down? That the world’s shortage of energy is not going away and that demand from China and the rest of the developing world is likely to continue to keep pressure on energy prices for a long time? That if the experts are correct and a couple hurricanes head to the Gulf of Mexico in August or September, prices could go back up to the where they were in the days after Katrina and Rita in 2005?

So I thought:

Suppose you wanted to cap your gas costs at the pump?
FAHGETTABOUDIT!

Suppose you wanted to lock in your heating oil costs for ten years?
NO WAY!

Suppose you wanted to protect yourself from higher electric bills in one of the most expensive electricity states in the country?
YOUBETCHYA!

That’s it! That’s something Brooklynites would understand. Put a Brooklyn Dodger’s cap on Max and send him out into Flatbush and Bay Ridge and have him yell:

SIGN UP WITH MXENERGY FOR THEIR YOUBETCHYA PLAN: Protect yourself from higher electricity costs through the spring of 2009. Save money today and protect yourself from higher prices tomorrow!

YOUBETCHYA!

I Love A Good Time Change

2007-08-02T15:11:00.000-04:00

This was written after a trip to visit the British Columbia Utility Commission staff in Vancouver.

I think I have discovered Nirvana. Flying out to Vancouver on the red eye provides the following benefits, consistent with MXenergy’s core values:

First and foremost, you add 3 hours to the work day -- incredible how that works. You leave at 9:30, have a six hour flight, and arrive at 12:30. Just imagine if you could keep going and never come back!

Second and equally important, you get the morning papers (the New York Times, Wall Street Journal, Financial Times, Globe and Mail, National Post) at 4.am so you can read them all before breakfast.

Third, you get all the morning news shows out of the way before dawn. You’re watching the Today Show at 4 am!

Fourth, you save on the cost of a hotel room (as well as all that time packing and unpacking.) Of course, the airport hotel is incredible but since I'm only here for 4 hours I think I’ll try to negotiate an hourly rate next time.

And finally, I get to read the 2 am update from our Toronto marketing staff in real time! These guys are working all the time but it’s incredible when I am actually up when they send out their daily note!

The only disadvantage I can discern is that you have to watch endless clips of hockey on Canadian TV before you get to the news. Who knows, though, I may become a Toronto Maple Leafs fan in which case I expect our Ontario customer count to rise precipitously.

Just One Bag of Peanuts?!

2007-07-30T17:46:00.000-04:00

I returned recently from a trip to Atlanta to visit with some of our commercial customers and to pay my semi-annual respects to the terrific people at the Georgia Public Utility Commission. Just before I left New York I read that Delta Airlines was emerging from bankruptcy. So I was particularly interested in flying Delta. One of the customers I was having dinner with is married to a Delta flight attendant. So when I booked my flight on Delta I thought I was doing a good thing: For Delta. For my customer’s wife. And for the city of Atlanta, where Delta is based.

Bad move. Maybe it was the fact that I had taken a flight to Houston the week before on Jet Blue. It wasn’t the fact that on Jet Blue I had room to put my legs. At 5’10” I’m not particularly tall, but since tearing my Achilles tendon last year I need room to stretch my legs and work them around a bit. Jet Blue seems to have heard from its passengers and given them some more leg room. I’m also not a huge fan of watching movies on flights, so I was not particularly impressed with the video screen embedded in the Jet Blue seat ahead of me. In fact, I found the constant ads annoying. They reminded me of Bruce Springstein’s old song in the early days of cable television, “Fifty-seven Channels and Nothing On!”

No, what impressed me about Jet Blue was its generosity. Nobody served a rubber chicken or a slice of shoe leather dubbed a filet mignon. To tell the truth I don’t even miss the dinners we used to balance on that little tray table. Instead, on three occasions during the flight friendly, smiling flight attendants came down the aisle and placed directly in front of the passengers a wicker basket filled with granola bars, packages of nuts, and bags of chips. When you reached out to take one the attendant said, “Would you like another?” “Oh, don’t mind if I do,” I would say. The act was generous. The smile was sincere. The atmosphere was hospitable.

Fast forward to Delta Airlines. As I felt a thrombosis working its way up my calves, I noticed a grouchy attendant coming towards me. He looked like his car had been totaled that morning after his wife had left him. He pushed a rickety metal cart that bushwhacked the knees and elbows of passengers on the aisle.

“What would you like?” came the gruff voice.

“What do you have?” I plaintively responded, hoping my guilt ridden voice would encourage him to take pity. I had not eaten since about 5 in the morning and it was now 7 pm.

“Peanuts!” was the response.

“I’d love some,” I said. The attendant handed me a bag – or rather, held a bag in my direction which I had to reach out to retrieve. Was it my imagination? Or did he clutch it tight in his hand and did I have to pull it from his grip?

“May I have another,” I asked in my most supplicating voice.

“Only if none of the other passengers want them and if there are any left,” came the reply.

I turned around and looked toward the back of the plane. Behind me was a sea of empty seats. “OK,” I said, “Please come back if there are any left.”

Needless to say, I never saw or heard from the attendant again.

I thought about my experience on Jet Blue. I thought about the cost of that little bag of peanuts. And I thought about writing a letter to the president of Delta whose picture I had seen in the newspaper recently.

What does this all have to with energy?

Customer service is more than just reassuring weather reports from the pilots’ cabin. It’s more than banners hanging from the ceiling of the terminal with slogans about customers coming first. It’s more than self-promoting ads in the newspaper or glossy inserts in monthly bills.

Customer service is about every single person in the company treating customers fairly and honestly. I wonder if that attendant’s manager ever quoted the Customer Golden Rule that we talk about at every MXenergy meeting: “Do unto our customers what we would want done to us.” I wonder if anybody ever asked the attendant: “If you were sitting in that seat on the evening flight and had not eaten since 5 in the morning, would you want another bag of peanuts?”

Sorry to say to my friends in Atlanta: Jet Blue has it right and Delta has it wrong. A bag of peanuts and a smile are small prices to pay for customer loyalty.

Storage Drops & Temperatures Begin to Rise

2007-07-23T15:55:00.001-04:00

Inventory levels as at July 13, 2007 were 63 Bcf lower than this time last year and are fast approaching last year’s records at 2,692 Bcf. Although the market has already discounted prices on storage, there are indicators that show signs that the decline has lost its downward momentum and is nearing exhaustion. Yesterday, the wholesale price of natural gas for the August prompt month rallied and reached a high of $6.73/MMBtu settling at $6.706 which is an increase of 2.73% from the previous day’s settlement.

Both National Oceanic & Atmospheric Administration and AccuWeather.com are forecasting unusually hot weather in the Northeast and Midwest next week and the beginning of the following week which has led traders to buy back previously sold positions in anticipation of higher prices. The fund buying will continue if temperatures soar next week in the major gas-consuming regions, further bolstering prices. In addition, traders are on edge as we approach late summer which is typically the more active portion of the hurricane season. Yesterday in a note to clients, EarthSat, a private forecaster raised its prediction for named storms this season from 16 to 18.

On the supply side, we have been importing record volumes of liquefied natural gas (LNG) since April and it is estimated that July will set a new monthly record of 3.3 Bcf/day. It is also anticipated that LNG imports will begin to taper off in the coming months as buyers in Spain and parts of Asia have already begun to express interest in August and September cargoes at competitive prices. In the very short term, these market conditions provide an advantageous window for longer term natural gas procurements.

Special Report: Amaranth

2007-07-16T15:54:00.000-04:00

On June 25th Platts Gas Daily issued a report on Amaranth, providing insight into the Amaranth event and potential future market repercussions. It was based on the United States Senate Subcommittee findings of excessive speculation in the natural gas market. The report highlighted how Amaranth’s excessive speculation distorted prices in the natural gas market. At one point Amaranth held over 70% of the open interest contracts in November 2006 along with
several spread positions in the market. The ability for Amaranth to unwind their positions was thwarted by an insufficient number of counterparties that would take on the
massive volume.

This brings up the issue of a price benchmark. If you hold a substantial position such that you, in essence, are the market, how can you value your position? You are the generator of the price. Therefore, unrealized gain and losses can be masked as they are no longer an arm's length benchmark. The owner of the substantial position now can price to achieve its required benefit.
Another important issue is that Over the Counter (OTC) trading is not regulated. The NYMEX is regulated and it requires traders to report positions and comply with size limits. The ever growing OTC market can provide the service and liquidity found in the NYMEX without such restrictions.

When Amaranth was asked to reduce the size of certain positions on NYMEX, they accomplished this by increasing their positions in the OTC market sometimes with positions greater than the original NYMEX position. These are just a few issues highlighted in the report. Although the report is lengthy, it is worth the read as it provides important insights to many other interesting risk factors that drive our market.

LNG To Meet Increased Demand But Must Overcome Local Resistance

2007-07-09T16:56:00.000-04:00

The demand for natural gas in the United States is expected to increase 20% over the next 25 years. New LNG terminals are needed, however, LNG projects are expensive and must overcome "not in my backyard" sentiments.

Over the last three weeks, the wholesale price of natural gas has fallen over 20% due to growing storage levels caused by higher LNG imports and lower demand than previously expected for electricity generation due to cooler weather in the major gas consuming regions of the country.
LNG imports increased 54.4% in 2007 versus 2006 imports according to LNG Watch, a private publication. "We need more LNG because the nation's demand for natural gas is greater than the current domestic supply" was quoted from a Washington D.C seminar. Furthermore, the U.S. Department of Energy forecasts a 20% increase in natural gas demand over the next 25 years. Already 15% of the natural gas used today is imported, primarily from Canada. By 2030, we'll have to raise this to 21% to meet US demand. That means turning to countries with an abundance of natural gas like Trinidad and Tobago, Australia, Russia and Qatar.

Meeting Natural Gas Demand with LNG
Natural gas demand is outstripping supply because it is a clean-burning alternative to coal and other petroleum products, such as oil - especially for generating electricity. By 2030, the gap between demand and supply is projected to reach 21%.

As we exhaust domestic supplies of natural gas, the U.S. will need to rely increasingly on natural gas that is brought in from overseas. To bring it to our shores, this gas must be converted into a liquid - LNG - before it is shipped. LNG helps the nation meet its very real and pressing need for new energy supplies now.

There are only five U.S. facilities plus one in Puerto Rico currently capable of importing LNG; not nearly enough to handle demand. To meet the growing need for natural gas, more LNG import terminals need to be built. However, LNG projects are expensive and must overcome "not in my
backyard" sentiments. BHP Billiton’s plan to build an LNG terminal off the coast of the Los Angeles was recently rejected primarily due to environmental concerns.

NOAA Predicts Late Summer Hurricane-Induced Natural Gas Production Outages of 86 Bcf

2007-06-25T17:22:00.000-04:00

This week’s commentary from MXenergy provides an update on natural gas supply and demand. Three weeks into the 2007 hurricane season has produced Subtropical Storm Andrea and Tropical Storm Barry. Chantal will be the next Atlantic storm name. In the record year 2005, Hurricane Cindy, the third storm of that season, hit July 3rd through the 7th.

This week wide-ranging temperatures across the country caused prices to fluctuate as needs for air conditioning arose and receded. Overall mild weather and adequate storage continue to place downward pressure on prices. Inventories could enter the winter at a record high of 3.5 Tcf or greater in the absence of a warmer-than-normal summer and hurricane-related supply disruptions. The National Oceanic and Atmospheric Administration (NOAA) has forecast an active hurricane season again this year with 13 to 17 named storms forming in the Atlantic Basin, including 7 to 10 hurricanes. The outlook includes hurricane induced production outages of 13 million barrels of crude oil and 86 Bcf of natural gas, primarily occurring in August and September.

An update on supply and demand:
Natural gas consumption for the first quarter of 2007 is 10% higher as compared to the same period last year. Demand this summer is projected to be similar to last year, which was much warmer than normal, leading to an annual average increase in consumption of 4%. Growth in consumption is expected to slow to less than 1% in 2008, but if anomalous temperatures spikes occur, gas-fired electric power generators will keep demand up in order to meet peak cooling demand. Natural gas production from the Gulf of Mexico is expected to decline over 7% this year. Onshore production increases are expected to offset the drop in the Gulf, leaving total production flat for this year. Imports of liquefied natural gas (LNG) are expected to reach 35% increase over last year, but pipeline imports on the other hand are projected to decline by 4% as rig activity and production in Canada (primary supplier of natural gas imports into the U.S.) continue to dip.

Bulls & Bears Go Head-to-Head

2007-06-18T11:51:00.000-04:00

I had the privilege of hosting MXenergy’s Client Energy Series teleconference last Thursday which featured industry expert Michael S. Haig, Director and Senior Commodity Strategist for Societe Generale. The topic was this summer’s energy outlook which concluded that the Bulls and Bears have been going head to head for control of the US natural gas market due to mixed fundamental indicators.

Predictions of an active hurricane season bolstered this winter’s wholesale price of natural gas. Also, this week, the Energy Information Administration (EIA) released its short term energy outlook which was fundamentally bullish in nature. The report stated that there is a 1.3% probability that more than 100 million barrels of crude oil and 600 Bcf of gas will be disrupted by the storms which is similar to the impact of Katrina and Rita using the “Monte Carlo hurricane outage simulation.”

And unlike last year, they are projecting a 97.8% chance that the offshore Gulf will be affected by storms this hurricane season. On the contrary, Haig noted that since hurricanes Katrina and Rita in 2005, there have been significant technological improvements which have strengthened rigs and pipelines. Thus, gas production is unlikely to be disrupted as severely as it was in 2005 if the offshore Gulf takes several direct hits this year.

The other fundamental factors where sentiments differ are projections of the upcoming summer weather-related demand for gas-fired electricity generation, storage injections and inventories, crude oil prices, domestic production, Canadian and liquefied natural gas imports.

To show the impact of the mixed market, this week’s slight departure of 7 Bcf from the expected storage injection released by the EIA Thursday sent the wholesale natural gas market into a frenzy and prices reached a high of $7.825/MMBtu for the July prompt month, which is about 3%
higher than the previous day settle.

All in a Day's Work

2007-06-13T16:25:00.000-04:00

So what do our representatives in British Columbia do all day? I've asked one of our sales representatives, Kendall, to give us a glimpse into his daily work ritual. Kendall is one of many MXenergy representatives that does direct marketing for us in this region. Here’s what Kendall has shared with us:

"Well, what can I say? I'm a door knocker! I've been doing it for many years,
and I don't have any inclination to stop for many more years. It's a way of
life, it's a way to interact with a lot of people on a daily basis, and it's
very easy to do if you have a product or service you really believe in.

Today, it's Monday morning and I'm heading to the MXenergy office
on Granville Street in the outskirts of Vancouver, where I'll be meeting the
rest of the sales team to go over our daily marketing goals. We do this each day
to cover off how many prospects we're hoping to meet and to set out our targets
for how many of these prospects we hope to persuade in becoming MXenergy
customers.

The next thing we do in the office before heading out
to the field is go over any cancellations that may have occurred during the
previous week. I've been doing sales for a long time, and I recognize that it's
inevitable that cancellations will happen; but, they should be few and far
between, and when they do happen, there should be a good reason for
them.

Lucky for us, we've had zero in the last week, and very few
since we've been marketing in this region. This is pretty much the most
meaningful number of the day. It means that we're selling a good service and
that we're selling it tactfully. It also means that our Third Party Verification
system (TPV) is working well.

TPV ensures that our prospects
understand everything we cover during our sales presentation at the door. The
way it works is that a third party company calls the customer after a sale is
made and asks them a number of questions to ensure that they fully understand
what they've signed up for. This is by no means a requirement by law, but it's
good to know that MXenergy is taking its own initiative to protect customers
with this standard. Believe it or not, MXenergy is one of the only gas marketers
in British Columbia that has this system in place.

The next step
in my day is to set out to the field. Today we'll be heading back to a
residential area in the city of Richmond, one of the more populated suburbs of
Vancouver. I will be dropped off with my partner, Kevin (best known by his
teammates for his operatic rendition of Kenny Rogers'
"The Gambler") who will
be working on the opposite side of the street.

Yesterday, Kevin
and I had a very good day in the field, with a lot of the new customers
referring us to other prospects who they thought would especially be interested
in learning about MXenergy's new Earth Friendly Partnership program. The
program, which was first introduced to the British Columbia market by MXenergy,
will offset CO2 emissions through the planting of trees and grasslands in North
America.

This is proving to be a big hit for the environmentally
sensitive residential and commercial customers, which makes our job a whole lot
easier!

Well, I got to hit the field, but next time (provided Jeff
let's me share his space on the blog), I will share with you the type of
conversations we have at the doors with respect to our natural gas offering and
our carbon neutral product, the ups and the downs of knocking on doors all day
long, and all the other interesting things that you would never think an
MXenergy sales representative would have to deal with all within the span of one
day!"

Summer to begin with above normal A/C demand

2007-06-11T15:54:00.000-04:00

From MXenergy's pricing and risk teams:

The driver of natural gas prices for this time of the year is clearly warm weather. While normal temperature forecasts drive prices down, tropical storms drive them up. The Midwest and NE have been showing persistent above average temperatures that have helped to support the recent rally. This volatility will continue throughout the season and will set the tone for winter prices. The fact that we've been injecting gas in greater quantities than usual is a significant bearish signal but don't be fooled, a period of cold winter weather for any length of time could wipe out any excess we have in storage. On the other hand a bearish factor in this market is the fact that LNG imports continue at surprisingly high levels, which could offset additional demand caused by hot weather and the need to burn more gas in gas-fired power plants.

Back to the summer overview, NOAA continues to forecast a pretty active hurricane season. We have seen tropical storms create quite a commotion in the market, with the first named storm on the first day of the hurricane season. Prices are being supporting by buyers and speculators reacting to the threat of hurricanes and the prospect of hot weather later this year. Demand for air conditioning is forecasted to be as much as 28% above normal in the Northeast through mid June.

The National Weather Service last month predicted that most of the US will experience warmer-than-average weather from June to August.

So once again we have a highly uncertain outlook, probable price spikes and ever present volatility. Hold on to your seats - a roller coaster ride is in the offing.