Operational excellence ÔÇô Energy Services Providers, Inc.

Energy with benefits┬áESPI is an electricity supplier that has taken advantage of deregulation to show phenomenal growth, with a business model based on educating customers in how to save money on their electricity bills. Have you ever imagined running a $100 million company from home? Dr. Frank Lewis did when he founded Energy Services Providers in 2002. His only disappointment, if you can call it that, was that the business grew so fast that he had to move it to alternative premises before the landmark was achieved, because he could no longer accommodate all his employees in his home office in Vermont.Dr. Lewis has a history of founding businesses to take advantage of niche opportunities. His first venture into energy was ESCO Energy Services Company, which became a dominant commercial and industrial lighting retrofit company in the Northeast with an outstanding reputation for quality service. Energy Solutions Group followed, a company focused on brokering commodities and demand-side projects concerned with the usage of electricity and natural gas in Connecticut and Massachusetts. The deregulation of electricity in some states has made the industry more complex than it was as a monopoly, and where there are complexities there are opportunities. Instead of the utilities owning the whole operation from power plant to meter, there are now independent generators producing electricity, energy suppliers buying it from them and selling it to customers, while the utilities retain ownership of the transmission wires and the customersÔÇÖ meters. In the middle is the independent system operator (ISO), a non-profit organization tasked with providing a clearing house to match wholesale generation offers with bids by electricity wholesale buyers. The utility still reads the meters and sends the customer the bill, but itÔÇÖs not technically the electricity supplier, only the distributor. So the customer pays the utility, which then pays the energy supplier, which pays the ISO, and the ISO then pays the generators, while the customer, whose main concern is for uninterrupted supply at the lowest possible cost, remains blissfully unaware of the different levels of activity behind the scenes. Through his involvement in Energy Solutions Group, Lewis became intrigued by the demand side of electricityÔÇönot only about total usage, but how and when power is used. ÔÇ£If you have a factory that powers up its equipment at the same time in the morning, that demands a lot of electricity all at once,ÔÇØ he explains. ÔÇ£If you turned on one machine, waited 15 or 20 minutes and then turned on another one, youÔÇÖre not demanding all the electricity at once, and that can save lots of money.ÔÇØAs New York state is deregulated, Lewis saw an inviting opportunity there to become an energy provider, buying electricity on the open market, selling it on to end users, and then educating them on how to manage their usage. He set up Energy Services Providers Inc. in October 2002, obtaining approvals from the New York Public Service Commission, the New York Independent System Operator, and various New York utilities. By April 2003 he started serving customers, from an office in his home on a quiet hill in Vermont. In 2005 ESPI became the largest electricity supplier in the National Grid territory in New York, with more accounts than any competitor, and by November 2007 the business became so big Lewis decided to move to premises in Williamstown, in the northwestern tip of Massachusetts. The major reason for the move was a fundamental change in sales strategy. ÔÇ£Companies like ours grow by recruiting customers through telemarketing,ÔÇØ he explains. ESPI was using various telemarketing companies to get the word out about what we they do, but the problem with relying on other companies who get paid by sales is that they can say almost anything. ThatÔÇÖs not how Dr. Lewis wants to runs a business. He wants to be honest with people. He found the sales people were saying all kinds of things just to get the numbers, so to educate and serve his customers better, he started his own telemarketing group with about ten people. He couldnÔÇÖt have ten people in his house, so he opened up the Williamstown office with his own in-house telemarketing group. ESPI outgrew that facility in less than six months, and in April 2008 it moved to its current location in Pittsfield in western Massachusetts, with a sales force now of about 50 people. Some electricity suppliers attract new customers by offering amazing deals for three months, but require the customer to sign a contract for a year or two or more. ESPI does not have any contracts or cancellation fees. They just say, ÔÇ£try us and see.ÔÇØEvery company likes to advertise its customer service, but few live up to their promises. In the deregulated electricity market, however, ESPI has found that superior customer service is a sure way to differentiate itself. Many supply companies tend to do a churn and burn. ÔÇ£They put telemarketers on to call a territory, get as many customers as they can, then go to the next territory. They donÔÇÖt care whether those customers are saving money or not.ÔÇØ Utility bills are notoriously complicated, and thatÔÇÖs no accident. Utility companies are required by law to explain what all the terms mean, but they do that in small print on the back of the bill, as obscurely as possible, it sometimes seems. ÔÇ£ESPI customer service people will handle every aspect of your enquiry. They wonÔÇÖt pass you off to four or five other people. They will explain every line item on your utility bill. Do you know what your tariff surcharge is? Do you know what the SPC charge is? ESPIÔÇÖs customer service team will make sure that you do.ÔÇØThe ESPI business model is all about educating customers to save money on their electricity bills, which is a great incentive for new customers, and once they begin to realize the benefits, they tend to stay. Since deregulation, customers have been changing electricity suppliers almost as fast as their socks, but ESPI can boast of customers who have remained loyal since 2003. Another service offered is help with grant applications to NYSERDA, the New York State Energy Research and Development Authority, which offers grants to businesses for projects that will reduce their usage of electricity, whether by installing energy-efficient lighting or a new refrigeration unit. The vast majority of New YorkÔÇÖs 6.3 million electricity customers contribute to this fund automatically through their electricity bills, but the application process is complicated enough to put some people off, and others are disappointed when their applications are turned down. ESPI has experts who know exactly which form to fill out, how to do it, and they can walk you through it. NYSERDA has also introduced the New York Energy Smart Energy Audit Program, designed to provide low-cost energy audits for businesses to help them make informed decisions and implement energy-efficiency strategies. ESPI is one of only a few electricity suppliers to provide every customer with an application to receive this audit.ÔÇ£We offer our customers a lot of things that our competitors do not,ÔÇØ continues Lewis. ÔÇ£We are the only one in the country to offer ÔÇÿWorking AdvantageÔÇÖ [an online employee discount and reward program, normally available only to the employees of member companies]. We have been approved as the only company that has ever done this with, so that all┬á our customers can use this benefit.ÔÇØ ESPI also gives back to its employees. ÔÇ£People are on the phones for seven or eight hours a day, so itÔÇÖs nice to get a chair massage or a table massage, or grab some candy or fresh fruit from the cafeteria.ÔÇØ ThatÔÇÖs all part of the business, they donÔÇÖt have to pay for it. ÔÇ£We have a really nice working environment, top-of-the-line equipment, and benefits. We spare no expense on furniture. People spend more time at work than they do with their families. The ESPI company is a family.ÔÇØ ÔÇô Editorial research by Paul Wile