Long-Time Retail Energy Exec: Retail Suppliers Should Embrace Owning The Customer, Even If It Means Dual Billing

Retail energy suppliers should prioritize owning the customer bill even if that means using dual billing in those markets without supplier consolidated billing, Chaitu Parikh, co-founder of start-up Valantor and a long-time C-level executive in retail energy, told EnergyChoiceMatters.com

Parikh, who has been in competitive energy since 1996, previously served as EVP & COO at Crius Energy, President & Head of Retail Energy at David Energy, and President, EVP, and CFO at MXenergy.

Owning the customer bill, "makes such a big difference," in controlling your brand, Parikh said -- "It allows you to have a brand."

Outside of Texas and Georgia, supplier consolidated billing is only available on a limited basis, at select utilities, or under pilots, or only open to large C&I customers.

In places without supplier consolidated billing, Parikh said that the use of dual billing, even without disconnection authority, will provide superior results for suppliers than utility consolidated billing with purchase of receivables.

A lot of retail energy suppliers are afraid to make the change to dual billing, Parikh said, because the move is a big investment in people and processes, "but long-term it's going to be better for companies who do make that switch to dual billing."

Parikh said that, while utility consolidated billing with purchase of receivables may relieve suppliers of bill issuance costs and reduces working capital needs, UCB with POR still includes risks and costs that retail suppliers must bear.

Parikh cited volatile POR discount rates which eat into retail suppliers' margins on term contracts, and the increased customer churn in POR markets, due to less stringent credit checks for utility service versus what a retail supplier may do (where permitted) under dual billing.

Churn under UCB, where the retail supplier has no customer ownership, results in suppliers spending more money on customer acquisition, while dual billing allows suppliers to increase customer retention through having a "real relationship" with the customer, including better communication and cross-sell opportunities, Parikh said.

Taking control and owning the customer's energy billing, even if that means dual billing without disconnection authority, "is a change the retail energy community should really be considering," Parikh said.

Parikh cited the premiums at which Texas books of RCEs trade at, versus non-Texas markets, with Parikh attributing much of the premium to Texas REPs being able to build brands and customer connections through owning the customer's bill.

Parikh also discussed market entry and innovation in the retail energy industry.

Citing companies like David Energy, as well as other new retail supplier entrants building business models around bundling battery storage with retail electric supply, Parikh said, "I think innovation has really started to come out."

However, Parikh noted that innovation from retail suppliers is challenged because, "a lot of times the regulations aren't keeping up," which creates friction in the ability of a retail supplier to create value from their new customer-centric offerings.

Parikh says that it's a "shame" that, in numerous markets, customers are paying, in regulated delivery rates, the cost of advanced meters, but those meters are not being used for RTO settlement, which is needed to bring the value of AMI to customers.

"All markets are going to have to address how to compensate customers for managing their power more efficiently; that's a change that has to happen," Parikh said.

Parikh noted the challenge in getting regulations changed, and said that, "you have to have consumers demanding this change," to get regulators' attention.

As Parikh advocates for retail suppliers to increase their ownership of customers via owning the bill, electrification has led large consumer brands such as GM and Ford entering the home energy space, even if not (yet at least) expanding their reach into retail electric supply. However, automakers, with EVs as the entry point to larger home energy and comfort services, are increasingly competing in the customer touch and grid services space, which may help bring necessary changes in regulations to allow customer value to be unlocked.

Parikh called large brands such as GM and Ford entering home energy "only a positive" that, "helps bring more legitimacy to what retail energy suppliers are doing."

Such entrants will, "force everyone to raise their game," Parikh said.

While the retail energy industry has seen some significant new entrants pairing retail energy with home batteries or other innovative services, Parikh observed that market entry is "harder now" versus his earlier time in building retail energy start-ups, due to increased regulatory scrutiny and credit being more difficult to access.

"A lot more capital is required to get something off the ground now," Parikh said.

Accessing credit was still hard when Parikh was building retail suppliers, "but nothing like it is today," Parikh said.

Parikh, who is now leading Valantor, a start-up providing AI enabled business outcomes, said that retail suppliers, "should be embracing technology in general."

Parikh said that, "Historically, many legacy retail suppliers have faced challenges in rapidly adopting and leveraging new technology to their advantage."

"This is where the intersection of technology and brand strategy becomes a game-changer," Parikh explained. "By embracing modern automation and AI-driven workflows, REPs can now reduce the traditional overhead of operational teams and regulatory compliance auditing. Deploying scalable tech solutions can save thousands of hours of human capital, transforming what used to be a massive back-office burden into an efficient, streamlined operation."

Valantor, which is having conversations with several retail energy suppliers, provides automation of workflows, especially for processes that are document-heavy or manual, leveraging AI and other tools that are "scalable and highly accurate," Parikh said.

Valantor is focused on bringing its solutions to the energy sector, in addition to the insurance and financial services industries.

Parikh cited, as a use case, data extraction from utility bills, automation of regulatory compliance responses and auditing all outgoing correspondence (welcome letters, renewals, contracts etc.) against state-specific regulations.