Apply HN: utiliz.co – revolutionizing how consumers buy electricity

[magthor]

Electricity deregulation is awesome, boring, confusing and hard. Over the last decade 14 states have deregulated utilities so consumers get a choice of suppliers. Power comes from the same place, down the same lines, on the same bill, but a wholesale supplier can buy from the utility at low prices and markup the price to the consumer.

The problem is the consumer must then search for the best price, decide how long to commit, figure out if the fees are worth it, is the energy green enough, will the rate be better next month etc. It gets complicated fast. They must also remember to switch before the term ends to avoid sticker shock as the rate spikes at expiry. No wonder only half of eligible consumers switch from their incumbent supplier—the system is biased towards big energy.

Utiliz fixes all this. Customers simply send us a picture of their bill and we take it from there. We track the market daily, find the best plans and times to switch our customers’ suppliers, and do so automatically as often as needed. As the best plans are short term we can save customers a lot of money through frequent switching, something that would be difficult, time-consuming and annoying to do themselves. We work transparently in the background; our customers never have to think about where they’re getting their electricity and have peace of mind knowing they’re always on the best plan. As our user base grows we’ll be able to negotiate even better rates with suppliers and pass all of the savings on ensuring our users stay with us.

Unlike traditional energy brokers we’ll never take money from a power company or add a spread over supplier prices. We’ll be paid a transparent, fair, flat annual fee by our customers.

The opportunity is huge: potential customers include all retail electricity consumers in deregulated states. Eventually we’ll leverage our scale and technology to also serve the commercial electricity and natural gas markets.

utiliz.co Save your energy℠

[bestattack]

How much will an average household save if they go with you guys? I remember looking into this at one point in NYC, getting confused and thinking that the power companies were all pretty much the same. If you aren't saving people a substantial amount of money then it's not likely to be worth it for them to switch, which is my guess as to why so many users stick with the defaults.

Also, how will you get users? The reason I looked into it at all was that I was visited door-to-door, but I blew them off and only did the research when I realized they weren't completely full of shit.

[magthor]

Great question. The answer is ‘it depends’. For example right now in CT the incumbent rate is 9.55 cents per kilowatt hour with Eversource. But you can get 5.99 c/kWh with Public Power for 8 months if you pay $39 enrollment, or 5.98 c/kWh with Sunwave for 6 months with no enrollment fee but a $50 cancellation fee. These are just a couple examples, there are dozens of offerings. As you noticed, the market is confusing, almost by design! But it definitely pays to shop around. Given average household electricity use of around 750 kWh/month we project we will save customers around $100-$300 per year.

We are planning to offer our service for between $30-$50/year, and will offer a money back guarantee if we don't save the customer at least as much as our fee over the incumbent supplier. The idea is to make it no-risk for people to try us. But the value proposition isn’t just saving money, it’s saving time. We handle everything so the customer doesn’t have to spend the time and mental effort to track the market and manually switch suppliers.

The reason we can do this is we are automating the whole switching process; hence it will not cost us much to switch a customer, we'll be able to switch many customers at the same time, and we'll be able to switch customers as frequently as needed to take advantage of short term rates. As we gain a large customer base, we'll also have leverage to negotiate better rates with suppliers, saving customers even more.

Ironically the costs of door to door and telemarketing is part of what creates the opportunity here. NYC may be the exception but outside of the City it's just too cost prohibitive for traditional brokers to do. They focus on the bigger wins (manufacturing and commercial). We will leverage internet / social (facebook ads, promoted tweets, adwords etc.) to reach the individual households. Also we will offer a referral program which will encourage customers to get their friends to sign up. Finally physical events (home shows, street fairs etc.) will help educate potential customers and those who do not use the internet as much.

By the way New York is next on our list after Connecticut (my co-founder Tom is from NY), so if you’re interested please register at utiliz.co!

[hotpockets]

I was also visited door-to-door, leading me to research gas rates here :

https://w2.lara.state.mi.us/GasChoice/Choice/CurrentOffers?a...

There is a sufficient disparity in rates to make a business out of it, in my opinion.

[tomplace]

Absolutely. While our MVP is residential electricity in CT we are building a model that scales to all 14 deregulated states, all consumer types (commercial, manufacturing etc.) and gas.

[magthor]

About the co-founders: Kevin (me) and Tom met in 2010 while working at Bridgewater (a large hedge fund) as a senior developer and technology manager respectively. As well as becoming close friends we often discussed startup ideas and committed to finding the right opportunity. We believe utiliz is it. It solves a personal pain point for us and we think there are many people like us. Kevin is writing the software and Tom is handling the business side, though there is a lot of crossover. Kevin previously founded and sold two successful brick and mortar companies.

[tomplace]

This is the best map we have showing our market opportunity. http://www.eia.gov/electricity/policies/restructuring/restru... - Notice how skewed to the north east it is? While we believe there will be a trend towards more deregulation the opportunity in the current market is huge.

[manav]

I got a message from Comcast and it seems like they are going into the space somehow. Have you looked into what they are doing, is it similar?

[tomplace]

When we looked at the competitive landscape to this project we did review Comcast Energy Rewards and what they have done is partnered with an energy provider for their customers in deregulated states to create custom deals. We don't consider this competition as to us they are 'just another plan option' however it does add complexity to how people select their plan and that's only good for us!

At this time their offering is a one time switch onto their partners energy plan and they are masking the rate with gift card type incentives. This is the same if you get a telemarketing call from A N Other energy and decide to sign up.

In our design we have already considered where we intersect with Comcast Energy Rewards and will allow a customer in their coverage area to give us their Comcast account number so we can evaluate that plan along with their other options, similarly we ask them if they are a veteran or want a certain % of renewable energy etc.

[kumarski]

I would use MMS APIs to make this a convenient reality.

I think your app in its current form has the wrong form factor.

[tomplace]

Hi there. Are you thinking for inbound (original bill upload) or outbound notification? We thought about it for the inbound but while we believe we can get the registration down to a simple 2-3 step process the bill itself is not enough so we would still need supporting information (force the use of the site anyway).

Regarding form factor our plan is a responsive site that down scales to touch devices. That will cover both desktop and mobile well.

[kumarski]

Don't make me scan a document and upload it to your site. That's too much work.

Just tell the customers "Text us, email us, fax us.... etc..."

[tomplace]

Sure. But why scan? A phone pic is enough. That was the plan. How they send it in is the customers choice but in my view a simple web form is easier than asking them to write a bespoke email.

But by and large we would accept applications any way they would want to be send but I question the value of building MMS in the MVP. This would cater to the 'camera enabled non browser devices' and our research shows this is a tiny slice of our audience. However this is a quick thing to build so as we progress research on our target audience we may change our mind.

[kumarski]

No, let them text the image to a number.

[magthor]

This is a good idea, I think we will do it. It looks straightforward with Twilio but let me know if you know of another good MMS API provider. Thanks!