Posted on: 08-12-2011 at 3:41pm
By Stream Energy Director of Wholesale Gas Operations Mark Bush
As with any growing company, the prospect of expansion is incredibly appetizing. The thoughts of expanding into new markets, gaining more customers and generating more revenue become a focal point of business. But Stream Energy is concerned with much more than just aggressive expansion. We must remain committed to the home bases that got us to where we are today.
The recent Power Surge in Atlanta was very needed and very well received by our Ignite Associates. A lot of energy and motivation was generated throughout the weekend. Expansion can be very exciting, but we need to remember our foundations that provided the framework for our current success. I believe it meant a lot to the people of Georgia for us to come to Atlanta and show them that Georgia is an important piece of the Stream Energy family.
But, we have to remember to take care of everyone. We are in the people business. We have to take care of our customers and Associates as well as the employees here at Stream Energy that take care of the Associates and customers. Power Surge went a long way to revitalize the Associate force in Georgia. With that came a lot of teamwork. I am very proud of the teamwork that took place at Stream Energy within the last few months that produced the new products for our Georgia customers. Both of the new products offered to our Georgia customers are new opportunities for Stream Energy. We have never offered a free gas promotion or a no-deposit product in which customers are not subjected to a deposit. This new product helps people become Stream Energy customers who might normally have challenges doing so.
We are in a very competitive environment. There is very little low-hanging fruit out there. We’ve always been a firm that has tried to offer very simple and affordable products in the marketplace. However, as our competitors become craftier with their offerings, we have to be able to adapt and react quickly. In that, the free gas and no deposit promotions are some of the ways that we are trying to compete in the marketplace. The challenges we face with these new products are ensuring accurate reporting on the number of customers Stream Energy acquires via the different products; managing our bad debt exposure on these products; and ensuring that the products continue to be profitable for the firm.
I think it’s important to continue living out the Stream Energy mantras within the corporate walls but also outside the walls. Offering creative products to our Georgia customers further exemplifies Stream Energy’s dedication to those mantras. Bringing up an idea is one thing, but you must also execute the plan. Teamwork is vital to the future success of our firm. Many departments, such as IT, Regulatory, Customer Operations and Ignite Field Development all worked closely together to successfully deliver these new products to our Georgia customers.
Energy commodities are the most volatile traded commodities in the world. We have to monitor them on a daily basis. Weather forecasts constantly change, and that makes it very hard to determine how much electricity and natural gas we should purchase. It’s very challenging when the difference in millions of dollars rests on the shoulders of accurate weather forecasters and analysts.
The hot summer across the nation has put a lot of demands on the Wholesale department at Stream Energy. July has gone down as one of the hottest months on record in the U.S., especially in the Northeast and here in Texas. The consistently high demand for electricity is something we have to be very mindful of as this affects our profitability.
Another weather phenomenon we constantly monitor is hurricanes. Earlier this year, analysts predicted between four and six major hurricanes to affect the U.S. We’ve had a slow start, thus far. However, we have to be very cautious of what could be lurking around the corner. Hurricanes don’t have a huge impact on the natural gas sector unless they come through the Gulf of Mexico and into the production region. What might appear as simple tropical depression with no real structure could suddenly develop overnight into a tropical storm and soon after that into a major hurricane barreling into the Gulf.
The onshore Shale gas production in places like Texas and Louisiana offer a natural gas source that is not threatened by hurricanes. This new drilling technology creates huge natural gas resources. Natural gas has a bright future within the U.S. as analysts believe there is more than 100 years’ worth of natural gas for the current U.S. demand. It is a very attractive industry.
Stream Energy has a bright future in Georgia as well as other markets. We currently manage less than 3% of the market share in Georgia, so expansion within that state is something to focus on in itself. Georgia was the first state to deregulate in natural gas. In terms of deregulation, it is a very mature market. However, because it has been so competitive, there has not been a new market entry since Stream Energy entered the state three years ago. Stream Energy hasn’t done everything perfectly, but we continue to improve every year in a market that is very competitive. Successfully managing the Stream business model in markets we currently serve helps us to build the foundation for continued expansion into other markets.