VP for growth at North American
Power reveals strategy
gas, new territories
American Power, a Norwalk, Conn-based power
born just over two years ago, will start selling natural gas starting with New
Jersey and New York "within the next few months," Taff Tschamler, senior VP of
business development and well-known energy market expert, told us last week in
an exclusive interview.
"We view ourselves as a marketing and data company, not necessarily as an
energy company," Tschamler
with typical candor. "We're not
building power plants or drilling wells.
We're trying to attract and keep customers and to manage all the
complexities of doing business with utilities and ISOs."
So far, that focus has led to success. Revenue from the firm's founding in
March 2010, through year-end 2010 was $25 million. Full-year 2011 revenue was $125 million
and the firm is profitable and cash-flow positive, Tschamler
provide net income numbers.
Employee headcount as of mid-May was 45, up from 40 a month before. He expects it will reach 50 next
Customer count at the privately held firm
160,000, up from 100,000 in November 2011.
North American sells in the residential power
in 16 utility territories in Connecticut, Illinois, Maryland, New Jersey, New
York, Ohio and Pennsylvania.
"We have ambitions to expand into all the states with residential choice
that we expect to be viable," including Massachusetts, New Hampshire and Texas,
Tschamler said. The firm also wants
to pick up customers in some territories not yet tackled in states where it is
North American's emphasis is unabashedly on marketing. "Part of our differentiation from other
retailers is using three main marketing channels." The firm has done
enormous amount of direct mail" in the Northeast, sending "many millions" of
pieces with help from an undisclosed partner and building "a large base of mail
is "traditional telemarketing" and the third -- now
about 40% of the firm's new business -- is a variant on the network-marketing
business model. That model is used
by many retailers, he added, but it typically requires customers of a retailer
to pay a fee upfront to offer the service to prospective customers, who may in
turn become reps.
It usually requires a monthly fee to use a company-provided
to manage the home-based recruiting and sales operation, Tschamler said. North American charges neither fee,
making it unique in the industry, he added.
"We are very excited about the prospects of this channel because it has
the potential for viral growth," he said.
Savings is key
Clearly North American is concerned foremost with offering customers
savings, as the firm's website puts claimed savings on its opening page. Where Commonwealth Edison charges
Illinois customers 7.73¢/KWH, North American charges 5.99¢/KWH, the
"It's quite difficult for us and anyone else to truly differentiate on
the product," Tschamler said. "This
is a product that's relatively low-interest. It's not like a car or a handbag or a
cup of coffee. It's mainly your
In addition to appealing to the pocketbook, the site aims at the
consumer's conscience. "Change for
you as a consumer -- and for humanity at large," it proclaims. It
make a monthly donation to each customer's charity of
Within the FAQ tab, customer skepticism is addressed with a page headed,
"We know -- this is hard to believe.
We expected your skepticism.
Magellan had to convince people the world is
It even addresses naive but real-world questions such as
my utility be mad at me for choosing North American Power's supply?" The site
answers, "Not one iota." The site veers into the cutesy: "Who do I contact if I
need a hug?" is paired with the answer, "Still us."
That language is all deliberate, Tschamler said. "Our chief marketing officer and his
team are extremely focused on being a marketing company educating customers on
the energy piece but making it simple and maybe even a little bit fun," he
"It's very important for us to have the look and feel that goes beyond
both mom-and-pop and a large corporation."
In addition to power
soon gas, the firm sells renewable-energy certificates (RECs), under the brand
name "American Wind." It uses RECs in delivering both its standard 25% renewable
power and its premium-priced 100% renewable power to retail
Tschamler, who ran DNV KEMA's retail energy practice for part of his 15
years with that consultancy, believes that falling power prices have helped
retailers compete with incumbent utilities. "If we were facing an increasing price
market, that would make it more difficult," he said.
"If utilities had bought their long-term contracts two or three years ago
and prices were now much higher, it would be much harder for us to compete. But that hasn't been the
In his view, deregulation everywhere should put an end to utilities'
playing any role at all as suppliers, as it did in Texas. Outside Texas, North American and its
competitors "have a strange relationship with the utilities. We compete with them but at the same
time we're highly dependent on them."
Tschamler would prefer that, as in Texas or the UK, competitive retailers
take on the burdens of billing and support typically still retained
the incumbent utilities. "It would
be better for the customers," he added.
And he believes utilities necessarily
innovative than competitive retailers because they are
monopolies. "There may be some
utilities that have an innovative mindset but they don't have the direct
financial incentives we do."
© 2012 GHI LLC