ERCG continues its ABC leadership interview series with Dan Sullivan, General Manager of Nextility Power and Gas. We sat down with Dan and discussed several topics, including --
ERCG: Nextility has evolved since its inception in 2009. Please provide an introduction of how Nextility started, what you do today, and where you see Nextility going in the future.
Sullivan: Nextility was launched in 2009 as Skyline Innovations with the mission of bringing low-cost solar energy to small and mid-sized commercial businesses. We originally focused on offering solar hot water (SWH) systems with the unique value proposition of no upfront cost and guaranteed savings vs. the utility default rate.
Our guaranteed savings solar energy model required the development of highly sophisticated billing software that automatically captures and pulls data from customers’ utility bills.
This software became the foundation of the current Nextility Energy Marketplace Platform and forms the basis of our current business model that includes energy brokerage, solar energy and other data-driven energy services. In September 2014 we re-branded Skyline Innovations as Nextility to better reflect our expanded portfolio of energy related offerings.
Today we are very focused on building out our Energy Marketplace Platform and expanding the services to offer customers. We believe there is an opportunity to fundamentally transform the energy brokerage business by using technology to deliver a superior customer experience while actually reducing our cost to serve. This will allow us to serve even the smallest commercial customers the high level of service usually reserved for larger customers.
You’ve been in the retail energy business for 15 years, primarily on the supplier side. What led you to move to the ABC side of the business, and how do your experiences on the supplier side help you in your current role?
I have been very fortunate to work for some of the top suppliers in the industry as well as launching a start-up retailer with a good friend of mine. I always enjoyed working on the supplier side and I was not looking to move over to a broker.
But when I was presented with the opportunity to work for Nextility I was intrigued by their approach and business model. Nextility is using technology to re-invent the broker model in a way that supports an improved energy shopping experience as well as creating much deeper relationships with end-use customers, suppliers and other strategic partners. It just felt like the timing was right for this type of tech-driven business model in our industry.
Because of my experience on the supplier side, I feel like I have a pretty clear understanding of supplier needs and issues. I know how difficult it is to be on the supplier side. And I understand the frustration they often feel from the changes in our industry such as shrinking margins, aggressive regulatory oversight and declining customer loyalty. I lived it first-hand.
At Nextility, we think of suppliers as customers. For all of us to win at this game we need a strong level of trust and cooperation between ABCs and suppliers. We have implemented systematic programs to provide our 30+ supplier partners with detailed metrics on their responsiveness to pricing requests and guidance on their competitiveness for both custom and matrix pricing. I know this is small stuff but my hope is this opens the door to more innovative ways of working with suppliers to offer customers higher value services. That’s how everyone wins.
What qualities do you look for in an ideal supplier partner?
There are a lot of great suppliers in our industry and we work with many of them at Nextility. There is no surprise in what qualities we look for in an ideal supplier.
There’s the basic stuff that everyone needs to do in order to be a viable supplier that includes competitive pricing, responsiveness to pricing requests and quality of their account team. And because we serve a lot of small commercial customers, we love suppliers with a daily pricing matrix and/or APIs that we can use to load pricing into our Energy Marketplace Platform.
We also review and monitor every supplier contract to insure there is an appropriate sharing of risk between the supplier and the customer. Our customers hate surprises so we try to make sure they never happen.
Beyond this basic stuff, we are very interested in working with suppliers who share our vision about how technology can help improve the efficiency of our businesses while supporting new products and services and delivering a better overall experience for our customers. We strongly believe this is the future of the industry and we love working with suppliers that share that vision and are willing to work with us to find ways to make it happen.
What advantages do customers have in choosing to work with Nextility as opposed to other ABCs?
I love it when someone asks me what makes Nextility different from all the other brokers out there. That’s usually the first question that gets asked by a potential customer and it's great to be able to tell and show them what we do.
For Nextility, it’s all about the technology that powers our Energy Marketplace Platform and the capabilities that it enables. We have spent millions of dollars building the platform, yet we have just scratched the surface of its potential.
For example, when a customer signs up for Nextility service, the first thing we do is access the customer’s utility internet account to capture their past 12 months utility bills. All the information on those historical bills are digitalized and captured in our database. So shortly after a customer signs up with Nextility our system creates a customer profile that includes their usage history, a breakdown of historic rates, payment history, etc. Basically we have perfect information about that customer which we can use to find them a better rate or in many cases tell them to stay where they are at while we continue to monitor the market until we find them a better rate.
Because our system automatically pulls data from customer bills on an ongoing basis we are able to provide customers excellent transparency on how they are doing compared to a number of benchmarks such as the utility rate to compare, and their average rate over the past 12 months. Our system continually communicates with our customers via email so they know exactly where they stand during the shopping or renewal process. We believe in openness and transparency and we want to make sure our customers know who their supplier is.
We are very excited about other types of data-driven services and solutions that are already on our product roadmap. As I said, we are just beginning to deliver what is possible.
Nextility has a strong presence in New York. The PSC has argued that ESCOs (suppliers) have not delivered value, particularly to smaller volume customers, and the PSC is taking steps to change marketing rules in hopes that ESCOs will guarantee savings or deliver a green product. What is your reaction to these new rules?
The situation in New York is obviously very complicated. My initial reaction to the ruling was disbelief and astonishment to a regulatory overreach by the New York PSC. In an attempt to fix certain marketplace issues and punish some companies it feels like the PSC is throwing out the baby with the bathwater. The new market rules will greatly reduce choice for the residential and small commercial market in one the most volatile and highest cost energy markets in the country.
I do believe the industry has to take responsibility for what is happening in NY and what can potentially happen in other markets as well. The industry has grown significantly over the past decade especially in the mass market segment and some company’s sales and customer service practices have done damage to the reputation of the industry. We see the effects everyday with the small customers with whom we work. Too many feel like they’ve been burnt and no longer trust any energy company. Regaining trust with our customer base is one of the toughest marketing and sales challenges that we face as an industry.
Serving mass market customers is tough for a lot of reasons. Most small customers have little desire to be energy experts and to fully understand competitive energy and how it works. This leads to a lot of bad purchase decisions by customers. For this reason Nextility will not sell a variable rate product to a small customer. Energy is inherently volatile and we feel that most small customers don’t understand the risk associated with being on a variable rate.
I believe the recent regulatory challenges will in the long-run be good for the industry as it will force us to become more customer centric and focused on building stronger relationships with our customers. Happy customers make for happy regulators and a profitable industry for all.
Nextility is committed to serving the small commercial market – our sweet spot. We believe we are well positioned to serve this underserved market. And our technology platform allows us to deliver the great customer experience customers expect and deserve.
For more information, contact Young Kim, Principal at ERCG
Phone: (617) 903-0877
ERCG sat down with leaders of dozens of ABC firms to get their insights on the market and how to build a successful business