Not Within My Ambit
We recently changed phone service provider to Time Warner Cable, from Verizon, and I have to say the change has been worth it. You get free caller ID, free long-distance, and the call quality seems reasonable, much better than I was getting out of skype, which just seemed to result in me making heavy breathing calls to the ones I loved.
But I'm not here to talk about phone providers, I'm here to talk about electricity providers. See, with the change in phone provider came two calls from telemarketers. The second was from the Fraternal Order of Police, and since I like living dangerously I sent him packing with a flea in his ear.
But the first was from an outfit called Ambit Energy, wanting me to make them my electricity supply company or ESCO. New York, you see, has mandated full retail competition in electricity, which means you get to decide which company supplies you with electricity. Well, the incumbent utility, ConEd, supplies you with it, keeps owning the wires that carry it into your house, bills you, and still owns a fair bit of generating capacity in the city.
The ESCOs basically go out into the spot market for power, or contract for it, and then resell it to you using the billing infrastructure of ConEd. It's rather complicated, and kind of involves the consumer trusting the ESCO to be super smart at scoring its own electricity at a good price and passing on the savings to you. If you're asking questions like "how can you tell which electricity is yours, or the neighbours?'" or "how can you treat electrons like yoghurt or gasoline?" you're not trying very hard to understand the wonders of deregulation.
I, though, was very excited because I'd missed all of the reps that IDT Energy carpeted Brooklyn with earlier this year, and I've been itching to debate deregulation with them (I'm an electricity markets nerd). Unfortunately, the gentleman that spoke to me decided he would need to pass my questions on to a supervisor and I had some bolognese sauce burning, so we had to end it there.
So I googled them, and got a rather boilerplate website that listed the management but not the ownership and so forth. This, I'm starting to think, is fairly common for energy supply companies right now, a few guys in a room with a reasonably snazzy website, a background in selling phone service, and a bunch of unanswered questions about what generators they buy their electricity from and at what price.
To Ambit's credit, its representative said upfront they'd offer me a guaranteed 7% discount for the first two months, but didn't promise anything after that period. Moreover the company that sells them power, Coral Energy, is a subsidiary of Shell and, in my experience, a pretty smart bunch of guys. I probably would buy electricity from Shell, since it controls some pretty ginormous reserves of gas, one of the main fuels for power generation in New York City.
Then I did a blogsearch, and all manner of strange third-party websites came up, including a myspace page, and quite a few craigslist postings, including this one. I'm reproducing the text below:
AMBIT ENERGY HAS ARRIVED FOR NEW YORK CITY YOU CAN SELL ELECTRICAL POWER TO RENTERS AND HOMEOWNERS AND GET PAID RESIDUAL INCOME MONTH AFTER MONTH FOREVER FOR JUST ONE PERSON SWITHCHING YOU KEEP GETTING PAID AS LONG AS THEY KEEP PAYING THE ELECTRIC BILL!!!YOU SEE EVERYONE HAS TO HAVE ELECTRICITY!!!THIS ROCKS GO TO MY WEBSITE AND JOIN AS A CUSTOMER AND AS A MARKETING CONSULTANT SO YOU CAN SELL THE POWER AND GET PAID FOR IT www.powertripp.ambitenergy.biz
Visiting the above-mentioned site I see it has graphics that are very similar to Ambit's page, but a little note that the site is hosted by a private individual.
An investigation into IDT by the Consumerist highlighted the background of several of the sales reps for IDT in multi-level marketing, and some similar sales tactics to those used in multi-level marketing. But IDT, as far as I could tell, paid people commission for getting people to sign up to its service and that was that.
Ambit is fairly frank about embracing the direct sales model. It charges its consultants $399 to sign up, and another $19 a month for a website. I'm guessing that these fees will go some way to funding the 7% two-month discount.
I'm not certain that describing it as pyramid selling is not going to get me into trouble, so I'll just say this: if participants in a deregulated energy market seem to spend more time cooking up louche sales tactics than explaining how they are going to get hold of your electricity, you might want to rethink the whole thing.
The similarities with telecoms are non-existent. Firstly, you can live without telephone service, sometimes for months at a time. Then there's the fact that it's fairly east to get hold of flat rate telephone service plans, but a lot harder to do it for electricity. A bored and snotty jackass like yours truly can be bothered to ask questions about how an ESCO goes about doing what its being paid to do (note I didn't say business model, because I'm not sure that it's supplying electricity that's making Ambit's founders rich). What are the odds than anyone else wants to?