ERCG continues its ABC leadership interview series with Huston Able, Executive Vice President at Choice Energy Services. We sat down with Huston and discussed several topics, including --
ERCG: You’ve spent your entire professional career with Choice Energy Services (CES), beginning as an intern in 2003 to currently serving as your company’s Executive Vice President. How did you choose CES, and more importantly what about the company made you want to stay and grow with it?
Huston Able: In 2003, I was offered an internship with the wholesale side of CES to be the first board boy for the NG and wholesale power brokers. During the internship, I was inquisitive about the newly formed company, Choice Energy Services, and as I learned and grew with the company I realized there could be a permanent opportunity for me. Over the last few weeks of my internship, I began to connect with people in my network who could benefit from CES services and set up meetings, which led to a full-time position as an account manager.
The initial appeal of CES was the people I was surrounded by who taught me the business. I also was drawn to the dynamic, competitive atmosphere. I've stayed over the years because I've been given all the tools necessary to excel in my position. CES has a lot of recognizable clients, especially in and around the Houston area, which makes engaging new clients easy. My focus now is to help the growth and advancement of our business.
ERCG: What do you think you personally bring to the success of Choice?
HA: I obviously have a long history with the company, so aside from providing continuity from the standpoint of business operation, I am able to share insights into what works and what doesn’t in the ABC space. I have developed strong relationships on the client side and can now leverage those to enhance the company value.
ERCG: CES is part of a family of companies that includes Choice Energy Group (gas brokerage established in 1994) and OTC Global Holdings (interdealer broker established in 2007). What competitive advantage do these sister companies confer on your business?
HA: Choice leverages its access to wholesale markets through OTC Global Holdings, one of the largest liquidity providers to the NYMEX. OTCGH brokers around 50% of the NG options traded on the NYMEX giving them largest market share of any firm. Since we share common ownership, the relationship offers us valuable market knowledge around future prices for NG and wholesale power. This gives our clients access to the widest variety of products and lowest prices available for active management of energy costs and real time basis. There are only a handful of firms in our space that have this kind of visibility into the commodities markets that drive retail power prices.
ERCG: On a related note, you have observed a trend in the ABC industry of brokers moving to the consulting side. Please explain the distinction and why you think this is happening, and why CES is well-positioned to move in this direction.
HA: I think CES is experiencing a classic industry maturity transformation. When deregulation was a brand new concept and customers were unaware they could “shop for power,” the broker was responsible for finding better prices than what the incumbent suppliers were offering. When the market slightly matured and customers became aware they could shop, the role of the broker changed and the end goal was to find the lowest price.
The business model is still strictly transactional. However, with growing market and consumer maturity, all of the players in the energy space have to figure out where they can create lasting, long-term value if they, in fact, want to stay in the business long term. With established relationships in place, it has become increasingly difficult to get in front of clients.
As mentioned above, OTC Global Holdings brokers around 50% of the NG options traded on the NYMEX. Utilizing our unique market position and relationship with OTCGH, CES is able to empower clients to be price setters by ensuring price transparency into each market. This unique market advantage ensures our clients are aligned with the best retail supplier at the best price for their business, which sets us apart from our competitors.
ERCG: The idea of a customer being a price-setter is really interesting. Please explain what you mean by that, and how would you quantify the benefit?
HA: Being a price setter is the opposite of being a price taker, meaning we encourage our clients to actively manage their supply positions. Leveraging our visibility into the wholesale markets, we strategically identify forward buying opportunities based on the client’s risk profile and business objectives. Ultimately, it is up to the client to decide, but we have observed that this approach yields about 20% improvement over passively buying at contract expiration.
ERCG: What qualities do you look for in an ideal supplier partner?
HA: There are a few things I look for when looking for an ideal supplier partner. First, the supplier is financially sound and able to offer competitive rates. Second, I look for one point of contact for all matters pertaining to my accounts. This allows for a rapport to be built between myself and the representative for easier negotiations around customer rates and agreements. Third, it’s important to consider the turnaround time for pricing requests and customer issues that need to be addressed.
ERCG: Lastly, what are your views on Mexico?
HA: CES is very interested in the Mexico market. Since we are headquartered in Houston, we have several contacts interested in the Mexico market, as well. We are currently monitoring progress toward procurement opportunity and have found the following through research:
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