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Direct Energy Focuses on Small Business Market for Growth
July 4, 2011
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Direct Energy is making small business sales a key driver in its U.S. growth plans, executives recently told investors at a Centrica investor conference.
Calling the market traditionally under-served, Chris Weston, Direct Energy President and CEO, said that Direct Energy Business expects to see about 30% growth in its small business customer base this year.
Additionally, Weston cited non-commodity services, under the brand 360direct, as another area for growth. These services include demand response, integrated energy planning, and distributed generation.
Direct Energy Business served 40 TWh of power and 63 Bcf of gas in 2010. In the U.S., Direct Energy Business volumes for 2010 were 36 TWh and 26 Bcf.
In the residential business, James Spence, Direct Energy CFO, reported that Direct Energy has seen customer growth in Texas over the last few months -- the first customer growth in Texas in five years.
Direct Energy's residential customer count in Texas is reported as 600,000 - 700,000, about 12% of the market. Texas residential volumes are 7 TWh.
In the U.S. Northeast markets, Direct Energy has 800,000 customers -- 300,000 electric, and 500,000 gas. The total is double Direct Energy's total from 2008.
The Gateway Energy Services acquisition contributed 250,000 residential customers to the total. Spence noted that, in particular, the acquisition has given Direct Energy a strong presence in the New York market.
U.S. Northeast residential volumes are 3 TWh and 50 Bcfe.
Canadian residential customers are 400,000 electric and 1.2 million gas.
Direct included a slide showing its market share in several regions as well as that of the top five suppliers.
Among residential growth strategies, Direct cited leveraging its Texas prepaid platform in other markets. Additionally, Direct cited leveraging affiliate British Gas' capabilities in smart energy and integrated energy and services offerings.
Direct also reiterated its previously stated plan for further upstream and downstream integration, setting a goal of covering 35-40% of its peak electric load with owned generation.
Peak load in 2010 was about 4 GW in Texas, 5 GW in the U.S. North, and 1.5 GW in other markets. Direct's current assets in ERCOT cover about 1.2 GW of its obligation; its upper-range goal of covering 40% of total peak load with owned assets would equal 4.2 GW.
As has been the case for some time, Direct is targeting "tactical" acquisitions, both for upstream assets as well as retail customer books, but Sam Laidlaw, Centrica Chief Executive, stressed that Direct would remain "disciplined" in any transactions, and, particularly for power generation, said that the asset would have to add value in the short-term in addition to providing long-term value.
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