FACE-TO-FACE: AN EFFECTIVE WAY TO SELL
DEREGULATED ELECTRICITY TO CUSTOMERS

by Donald E. Felsinger, Sempra Energy

Deregulation of electricity is supposed to create competition, which then gives customers the opportunity to save money on their energy bills. So far, however, most families and individuals have not enjoyed the benefits of the new competitive marketplace for four reasons:

1. Most deregulated energy providers are more interested in large sales to industrial and commercial accounts than in selling to individual customers. The large energy users are easier to market to and provide a more lucrative return on sales efforts.
2. The energy industry is not used to marketing to customers, because, as an industry, we’ve become accustomed to doing things the old way.
3. Customers are, for the most part, still unclear about the new choices available under deregulation. Before, they never had to think about choosing an energy provider. They just paid their bills and flicked the light switch.
4. For the customer, the process of choosing a new provider is relatively complicated.

From the moment my company decided to participate in deregulation, we wanted all customers – and not just large commercial and industrial concerns – to benefit from the opportunity to buy deregulated energy. We explored several different ways to reach residential customers:

• We didn’t like direct mail, because people are inundated daily with direct mail solicitations. Direct mail also often suffers from a relatively low response rate, which drives up costs.
• We thought that selling exclusively over the Internet would shut out customers without access to computers.
• We were convinced that undertaking a major advertising campaign wouldn’t work. This was proven by a major energy company, which spent an estimated $50 million on a national advertising campaign in 1997, then stopped selling electricity in most markets less than a year later because it couldn’t generate enough sales.

Moreover, none of these selling methods efficiently accommodates an important requirement of the New Jersey deregulation law. New Jersey requires the new energy supplier to obtain a “live ” or “wet ” signature from the customer to switch his/her service. It’s done to protect customers, but it also makes it harder for companies that use direct mail, the Internet or advertising to sell electricity.

Energy America decided to sell energy face-to-face for one reason: because it works. Energy America has been in business only since June of 1998, and we’ve used direct marketing to sign up nearly 400,000 customers across the country, including 35,000 in New Jersey.

Door-to-door selling works for many reasons:

• It enables us to provide customers with a friendly and knowledgeable person who can explain some of their new choices under deregulation and answer questions.
• It makes it easy for the customer to sign up immediately if that’s what he or she wants to do.
• It enables us to get the “wet ” signature that New Jersey law requires of customers who want to change their electric supplier.
• It is the least expensive way to sign up new customers, and we can pass the savings on to our customers.

In contemplating how to sell energy door to door, we were well aware that this type of marketing often draws fire because of unethical practices by a few companies. But we’re different. We’re a Fortune 500 company that has more than a century of experience in the energy business – a company with a long history of active community involvement and excellence in customer service. We have the largest customer base of any U.S. energy services company. We wouldn’t be in business today if we didn’t do right by our customers.

Energy America does many things to ensure that we maintain a straightforward, honest and friendly relationship with New Jersey customers:

• We recruit only qualified sales agents and we put them through four days of rigorous training and orientation.
• We have developed and strictly enforce detailed policies and procedures on what constitutes ethical door-to-door selling.
• If any sales agent violates our policies or procedures, he or she is terminated on the spot.
• Any customer can leave us for another supplier at any time for any reason with no penalty.
• We have introduced a new program, Energy Choice Confirmation, which uses an independent third party to verify that every customer signing up with Energy America for lower-cost electricity is comfortable with the decision that he or she has made.

New Jersey customers pay some of the highest electric rates in the country. Energy America guarantees 5-percent savings over the 5 percent they are already getting as a result of the state’s deregulation law. But any company that sells a product or service will attract some inquiries or complaints about its claims. Thousands of complaints are filed against Public Service Electric & Gas (PSE&G) itself every year. Complaints are filed against us, too. We take every complaint seriously, and like any good company, we try to learn from our experiences.

Everything we’ve learned so far indicates that our door-to-door selling brings lower cost electricity to customers. If only industrial users get the full benefit, then deregulation will be considered a failure. Direct marketing makes certain that deregulation works for the average family. When employed by an ethical company with strict sales policies and a rigorous code of conduct, selling electricity door-to-door is the most effective way to ensure that large numbers of electric customers enjoy the benefits of competition – that is, lower electricity prices.

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Donald E. Felsinger is group president of Sempra Energy, a Fortune 500 energy services holding company based in San Diego, California. Sempra Energy is a joint owner of Energy America, an energy marketer in New Jersey and five other states, Mr. Felsinger has more than 25 years’ experience in the energy industry.

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