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Start-Up Retail Supplier Won't Make Profit on Power Sold, Will Charge Fixed Membership Fee Instead (Wholesale Club Model)

June 28, 2016

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Copyright 2010-16 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

Start-up Drift Marketplace, Inc. has filed to be certified as a New York ESCO, and also recently applied for FERC market-based rate authority.

Drift's website suggests that the company won't "profit" from selling power, but rather by charging a monthly membership fee. The website touts its provision of "wholesale" rates to customers (avoiding a retail mark-up or profit)

We believe Drift's model would be a first at the mass-market level for a retail supplier (certain aggregations eschew more traditional volumetric commissions for a flat membership fee, but their suppliers are still presumably profiting on volume).

According to an FAQ on the company's website, "Other power companies make more money when you use more power. We don’t. Since we are a software company, we charge a fixed membership fee to keep our servers running, to keep our team working on new ways to lower your power bills and continue adding clean energy to the mix."

An FAQ asks, "Why doesn’t Drift make a profit on the amount of power sold?" with an answer of, "This is sort of a follow up to the last question and it is a BIG one for us. We believe that the only people who should make a profit on energy are the people who make energy. Our mission is to get you the power you want at the lowest price. If we profit when you use energy, we make more money when you spend more money? That’s not cool. By charging a fixed price each month, we win when you win."

The company also emphasizes an aggregation approach to mass market service (with a "Power in numbers" tagline), stating, "Together, the Drift community acts like one big giant power user. Our software acts like your own personal energy buying team, working to lower your power bill."

"Drift members buy together and save together," the website states

While this may sound like a brokerage (indeed, there are aggregations that charge a membership fee rather than using a volumetric commission), the New York ESCO application, and an FAQ informing customers that "Drift Marketplace" will appear on their utility bill confirms that the business will be a retail supplier. Drift's FERC MBR application confirms that the company intends to act as a, "retail energy supplier in various jurisdictions in the United States."

Material on Drift's website suggests renewable energy will be a focus, but does not imply that the company will exclusively feature green energy.

Furthermore, in an FAQ discussing termination of membership, Drift suggests that it may sell entitlements or stakes in energy projects, possibly including community renewable energy or distributed projects. Specifically, the FAQ states, "There are never any contracts unless you’re investing in energy projects."

Drift's website further touts, "Buy green energy directly from the people who make it."

The officers of Drift Marketplace are: Greg Robinson, CEO; Alan Tilley, Vice President of Engineering; Ed McKenzie, CTO; and Matthew Robinson, Director of Operations. Robinson and Tilley previously founded Questar Energy Systems, which provided solar energy solutions

According to its FERC MBR application, Drift Marketplace is owned:

• 15% by Available Option Pool

• 13.97%, by Greg Robinson

• 13.24% by Alan Tilley

• 10.23% by Third Kind Venture Capital

• 10.00% by First Round Capital

• 9.27% by Edwin McKenzie

• 8.18% by Lerer Hippeau Ventures

• 5.00% by Kal Vepuri

• 3.64% by Acequia Capital LLC

• 3.44% by Matthew Robinson

• 3.29% by Barry Tilley

• 1.82% by SV Angel

Several additional individuals own less than 1%

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