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Texas Retail Provider Tells Brokers To Move Customers To Another REP, Says ERCOT POLR Process Appears Imminent
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Drew Gormley, CEO of Texas retail provider Energy Monger, LLC, issued the letter below to brokers suggesting that brokers move customers to another REP, given that a, "POLR process looks to be imminent," due to an ERCOT breach and, as stated by Gormley, "ERCOT ... advised they would no longer work with REPs that are in default and would soon start the breach process."
As previously reported, Energy Monger, LLC has been listed as short paying invoices to ERCOT
The letter is as follows. Republication does not necessarily indicate agreement on any point. Any averment in the letter is solely that of Energy Monger
Letter From Drew Gormley, CEO, Energy Monger
To all,
I email all of you today to tell you thank you. Thank you for trusting me and allowing me to work with you for the last few months. It has been fun getting to meet and befriend many of you. We crossed over 300 brokers and potential brokers in Texas; a 10% market share in just seven weeks of launching our Strive to Five program.
At this time I think it is appropriate to start moving your customers to another provider of your choice. I have not been given any specific date of an ERCOT breach, but the POLR process looks to be imminent.
I have waited patiently the last week to communicate some answer to you about Energy Monger’s situation, and had hoped to communicate some positive news. I was on a call today with ERCOT where they advised they would no longer work with REPs that are in default and would soon start the breach process. The market is short $2.6 Billion and there are several from what I understand. A grid that should have been very reliable was completely the opposite. Energy Monger looks to be a casualty due to the failure of the market.
Energy Monger did some very great things. We built our own systems; EDI, billing, payment processing, CRM, load forecasting, wholesale settlement, lead generation, broker management and many other important items for a REP. We billed our customers for four months without a single complaint. It was built and scalable it to be a significate competitor in the market. Energy Monger performed a successful flight test with ERCOT, and each TDSP and did it on our first try. Where most retailers argue that they innovate – we actually did it without third-party vendors. I am proud of what we did with just 12 people and over 300+ brokers. I appreciate all the work the team did. Thank you.
I am convinced that Energy Monger did not fail the competitive market…the competitive market failed Energy Monger. $9/kWh is a very difficult price to overcome especially when we had just started. The $6.5MM that ERCOT wants for us to stay in the market – economically does not make sense for 3,756 customers. There is no incentive for us to pay the invoices after the $6.5MM because there are no assurances of any relief for the $6.5MM we owe.
ERCOT’s initial request of $4.5MM in collateral calls could have shut us down immediately, but they loosened their protocols and allowed us to remain in the market for a few more weeks. Our hopes and prayers of regulators or legislative members, stepping in to stop the ridiculous and unjustified pricing of $9/kWh still has not happened. They agree that customers should not be charged this rate and it’s price gouging, but for some reason it appears to be justified when business are charged this rate.
Generators will win again even when they failed to deliver generation for the market when we needed them. Instead of building new generation, they have spent the last decade spending billions of dollars purchasing independent REPs and re-monopolizing the ERCOT retail market. Today there are two companies that control an estimated 80% of the competitive market. ERCOT needs more generation, and if generators will not reinvest in what they should be focused on - Texas will continue to struggle. Generators have a 20% market cap on the generation market share in ERCOT but no market cap on the retail electric market.
There were several retailers that will or have defaulted. Some were purchased in a fire sale, and some you will not know about because a supplier stepped in to save the business. I was offered the opportunity to continue from our supplier but it came at a significant cost. Losing majority control, a debt facility to pay back over several years, and injecting additional capital for a four month old company did not make sense. There were REPs that caved under pressure and deals done behind closed doors will never illustrate what actually occurred to the retail electric business in Texas.
Market reform is needed to make a better competitive market. $9,000/mWh is not a rational number nor is it sustainable. It is a complete made-up number. I am convinced if the price cap was $30,000/mWh, we would have hit that number for the five days for each hour. The ridiculous price cap has not provided any significant investment in new power plants in the last decade. Generators should get out of the retail electric market. More power plants are needed for our growing population, and that should have been the focus of generators – not retail.
I look forward to working with in the next couple of weeks and know that I am here to help. Reach out and don’t be a stranger!
Keep moving forward and we will all be just fine. All the best!
Regards,
Drew
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March 3, 2021
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Copyright 2010-21 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
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