Conversations with a Customer

I started my day this morning with an email from one of our customers. I enjoy hearing from customers, but this was no love letter.

This customer in Georgia was upset with her energy bill this month. Prices have dropped sharply and she wanted to know why we could not lower her price. She was upset that she had locked into a long term contract last year.

“I called several times asking why my bills were so high and then found that the current rate for new customers with MXenergy was $0.9490 a therm. This is absolutely terrible.”

I can understand her frustration. I have been disappointed with my own heating oil provider since I locked in rates last spring at twice today’s market price. I have also paid thousands more for my fixed rate mortgage in recent years than I would have if I had chosen a variable rate mortgage.

I wrote the following to our customer:

“Energy volatility is, as you may know, the highest in the world, far greater than the stock market or interest rates. Over the past year energy prices have dropped more sharply than the stock market. In prior years, they also climbed more sharply than the stock market, some five-fold between 2002 and 2007!

“For over ten years we have protected customers from higher prices, never walking away from a single customer irrespective of volatility. To do so, we have put our capital on the line, buying energy supplies far into the future and committing our own capital up to three years before we have been paid by our customers. As a result, we are proud of the fact that we have saved numerous customers from energy spikes that could bust their budgets and in the case of small businesses force them to close shop or lay off workers.”

I explained that in recent months energy prices have fallen sharply. Because we have already contracted for energy supply at higher prices we cannot willy-nilly drop our prices. But we do our best. We review customers on a case-by-case basis and sometimes can offer a small price reduction.

I continued:

“I regret that we are unable to control world energy prices. I also regret that once we lock in our forward prices with our suppliers we are unable to walk away and pass the savings on to you. At the same time, I am extremely proud of the price protection we have provided our customers as well as the extremely fair early termination option we offer customers, at a cost far less than we incur when customers leave.

“Sadly, our loyal customers end up paying more to cover these additional costs. But as long as most of our customers appreciate the price protection we provide the added costs are minimized.”

My suggestion to today’s consumer? Take advantage of fixed-rate plans NOW, while prices are still low.

Does that make a current customer, who may be paying higher energy prices today, any happier? Probably not. But, the bottom line is that we are in the customer service business. If customers are still unhappy with our products and services, we offer an option to opt out. We allow our customers to end their contracts if they pay an early termination fee, which is minimal compared to other termination fees such as cell phones contracts.

Later in the morning I received another note from our customer.

“Thank you for your reply. I have to admit I was not quite sure if you (or anyone for that matter) would respond. It is a bit refreshing.

“We will probably have an ‘agree to disagree’ in the end of this dialog but that is OK.”

I would like to do more than disagree. The core mission of MXenergy is -- and has always been -- to help both families and businesses control their energy bills. I am quite satisfied that we are doing the right thing by our customers. We will continue to provide price protection and we will continue to look for better ways to deal with the costs – and frustrations – of energy volatility.