Genscape : Making the Leap from Broker to Retailer

There are many reasons a broker might consider becoming a retail supplier. They may want transparency and control over the margins embedded in their customer's retail energy contracts. They may want to offer longer-term contracts to customers allowing the firm to build long-term equity for in the business or even considering an exit strategy in the foreseeable future. In general, we see brokers reach this cross road because they are looking for ways to provide better value to their customers.

As an energy and risk management company, we have heard the pain points of many brokers as they have become our clients and moved along the path to becoming electric and gas retailers themselves. In this process, every company faces unique challenges, ranging from capitalization to roll-out planning, but it is fair to say that there is a general flow to the process of being a wholesale power and gas market participant.

Below, we have highlighted the biggest steps on the road map to becoming a retailer supplier in a deregulated market in North America. We encourage you to reach out to us directly to get our perspective on particular decision points or road blocks in this process as early as possible. Since 2010 we have been building a team with a comprehensive background across all deregulated territories in the U.S. and Canada. GP Energy Management is multifaceted. We combine energy management, consulting, and commodity risk and operations support to provide a full array of services to electric and gas retailers and generator clients. What makes us different is that a broker can contract us to hands-on navigate them through the start-up process under a simple fixed monthly retainer. We do this to enable our customers to grow freely while maintaining fixed consulting costs. This makes us a great partner for brokers ready to make the leap.

• Head Room Analysis and a go-to Market Strategy

We always start by asking the obvious question, 'Is there opportunity in the markets where your firm has a presence?' Measuring and qualifying these details in your territory is key. Building this business case allows the broker to make an educated go or no-go decision for making the leap.

This phase includes preparation of state and utility licensing applications, utility EDI testing project management, ISO, and pipeline applications. The timeline for these activities is different in each region. Some processes must be done sequentially, others you can parallel-path. Understanding the timeline is essential to managing the burn rate of your capital investment in this new business venture.

Done properly, the credit approval process with potential counterparties and lenders requires highly informed financial modeling. To get a credit wrap or a Preferred Service Agreement (PSA) you will need a complete Forward Financial Projections model. A new retail supplier needs to know their effective cost of capital for various supply, ownership and credit options as well as a way to ensure they can remain solvent as they execute on their plans.

When brokers already have a book of business in the region they are becoming retail supplier, they need to effectively communicate their new service offering to existing customers. When operating in a new region, proper time and resources need to be allocated to the strategy of acquiring new clients, maintaining relationships and doing so in a compliant manner that adheres to internal risk policies.

• Setting up Billing Systems

There are many options for enterprise-level customer billing software. This step can be addressed early on the path to wholesale market participation, but should be done so with an eye on each businesses specific strategy. In some cases there may be data that needs to be migrated or pricing structures that need to be customized.

To find out how we can help you please contact us at [e-mail] so we can discuss your needs and provide you with a solution that fits your goals and bottom line.

Please note that all reports, summaries and other work product relating to client portfolios provided by GP Energy Management LLC (whether previously, now or in the future) are based solely and exclusively on data provided by such client and that GP Energy Management LLC hereby disclaims any liability and makes no representation or warranty as to the accuracy, truth and correctness of the data contained therein.

GP Energy Management, a wholly-owned subsidiary of Genscape, Inc., is a registered commodity trading advisor (CTA) with the Commodity Futures Trading Commission and is a member of the National Futures Association. GP Energy Management provides a wide range of energy services, including energy management, consulting, and commodity risk and operations support, to its customers.