By Rob Driscoll
I had the pleasure recently of sitting down with Darren Chu, Managing Director of UTILITYnet and its retail arm, Spot Power, for a Q&A about an Albertan business that has consistently found ways to deliver exceptional value to customers.
1. Spot Power, and its parent company UTILITYnet, have a long history of innovation and business excellence in Alberta. What has been the recipe for success?
DC: Spot Power began as a "David vs Goliath" story; we took issue with ENMAX's business practices and decided to start our own company. Setting that aside, the short answer is "what you see is what you get," so as a local company we bring trusted services to customers that maximize the value they get from a utility company - no gimmicks and no surprises. As a smaller player in the energy industry, it’s easier for us to adapt and pivot as regulations change and the competitive landscape shifts. We operate a tight but flexible operating system, which allows us to innovate and drive changes in the industry. We don't wait when we see an opportunity; we simply get it done. Our overhead is also a lot lower than the big utilities – so much so that for the last 77 consecutive months, we have been able to offer lower electricity rates than the Regulated Rate Option (RRO) charged by ENMAX and others. Our advantage? We have been able to help people save money on their utility bills.
2. UTILITYnet has a lengthy list of services that you provide to Albertans – e.g., energy management, billing validation, retailing services, and high-speed Internet. What are the company's strengths and areas of greatest potential growth?
DC: That’s a great question. One of the ways that we have managed to grow is by leveraging the power of our data and successfully maneuvering in the ever-changing landscape of government policy and regulatory changes. Figuratively speaking, we are sitting on a mountain of data that we can mine down to the nth degree, and that is a powerful advantage.
By leveraging historical data and sharing it with each solar micro-generator, we have been able to provide recommendations that enable our customers to maximize the value of their investment in their PV system. Our Hummingbird Virtual Solar Community represents a significant chunk of the total micro-generation sites, but when you consider how many homes have yet to install solar, the market becomes virtually unlimited.
We have been able to network all micro-generation customers into what is now called the Hummingbird Virtual Solar Community with almost 200,000 solar panels across thousands of households in Alberta.
The solar industry continues to grow at an exponential rate as we push toward a net-zero destination.
3. How can UTILITYnet and the Community Retailers network under your umbrella help Alberta businesses, farms, and residences purchase power from the grid at spot prices that are lower than what they would otherwise see?
DC: The data analysis and data mining I mentioned earlier have really helped us ensure that we are hedging our energy supply thoughtfully without exposure to unnecessary risk. We take a conservative approach in our business, meaning that we know where we stand and where we need to be with a fair bit of certainty. Our team really should be congratulated because, despite our small size, we perform a lot of analyses very quickly to make sure that we are operating within tolerances.
In May, we lowered our consumer retail prices by 15 to 20%. We care deeply about the affordability crisis in Alberta, and are doing everything we can to help consumers make smart choices for their wallets and families. Our new rates are not gimmicky and don't carry hidden fine print. With us, what you see is what you get. Our rates are low. Period.
4. How does UTILITYnet's expertise in automation help your clients?
DC: Automation prevents human error, pure and simple. It also allows us to capitalize on operating efficiencies, the net result being that we can then pass on to customers through lower retail prices and administration fees. We have the data, we have the expertise, and we have an in-house IT team with the skills to automate all operational processes. We also adapted the online grid reporting system used by our major clients in the oil and gas industry to create a robust “My Account” web-based portal for smaller clients. Through My Account, they have access to a self-directed paperless system designed to help them manage all aspects of their accounts.
5. How is your business able to compete with larger firms such as ATCO and Direct Energy?
DC: Did you know that Direct Energy is an American company operating out of Texas and that ATCO sold its IT systems division to a company in India? We are local and that is an advantage. Our business model is a disaggregated retailer network. Through a province-wide network of Community Retailers, we take a community-first approach to retailing services such as electricity, natural gas, and Internet to Albertans. One of our guiding values is to be giving back to the communities where we live and work. That means donating a portion of the proceeds of the sale of energy back to charitable organizations.
In some cases, it’s a local economic development fund; in other cases, it’s organizations like food banks. Unlike one of the largest competitors with call centres in Mexico, Guatemala, or the Philippines, we strongly believe that running a totally integrated business unit is important. Being a true locally based company sets us apart.
Our local Customer Care team understands the needs of Albertans. When customers call in, they get someone on the phone in 15 seconds or less and they are speaking to someone who can relate to the current weather, political, and economic climate.
It is also worth noting that we are disruptors in the industry. We have been publishing blogs for several years to highlight issues in the industry and digging into the details to educate consumers. If you want to know what the Local Access Fee is why the Government of Alberta introduced changes to the LAF through their Utilities Affordability Statutes Amendment Act, you need only look as far as our blogs. We introduced budget billing; the Pick-a-Date solution that lets you choose your invoice date; and adopted a cash-back program similar to Costco that pays Members 3% on all energy imported annually.
6. UTILITYnet introduced its Solar Club™ to help home consumers, businesses, community associations, and farms benefit in numerous ways from generating power through micro-generator solar operations. How does the program work?
DC: The Solar Club™ is the premier solar-specific energy retail program in Alberta, and was launched in 2019. Its history, however, goes back 25 years to our Green Report, a reporting system designed to track fugitive NOx and SOx emissions for BP and Talisman Energy. The Solar Club evolved from this as the foundation.
The foundation of the Solar Club program is a unique set of rates that allow micro-generators to adjust their rates seasonally. Members get access to this seasonal rate-switching program free of charge. The HI Rate of 30 cents/kWh is set for the summer months when customers are exporting more energy to the grid than they import. In the winter months, when production from solar panels declines, the customer can toggle to a LO rate of 10.75 cents per kWh in order to reduce their costs. Other features include the opportunity to earn AIR MILES®, which is exclusive to UTILITYnet, access to our carbon-credit platform, the option to buy Renewable Energy Certificates (RECs) to help green the grid, plus 3% cash back on every kWh imported from the grid annually. Since the Solar Club was formed, we have paid out over $17.6 million to micro-generators, with another estimated $5 million already in 2024.
Since 2019, other retailers have copied our model and now offer the rateswitching seasonal option, but we were the first and original retailer to offer the micro-generation market this ability. One in every four micro-generators in Alberta are currently Solar Club Members, and more are joining every day. In addition to being Members, our micro-generators are part of the Hummingbird Virtual Solar Community, one of Alberta’s largest distributed solar farms. At an estimated 85 MW in size, we are competitive with some of the largest solar farms in the province. By aggregating rooftop solar PV systems, we have shown the collective power of individuals, all of whom subscribe to our motto of “doing what we can.”
Lastly, since the launch of the Solar Club, we have donated over $300,000 to various community charitable organizations. We believe it is our responsibility to give back to the people in the communities in which we live and do business. For more information, check out our Community Partner program.
7. How important is sustainable energy to UTILITYnet, and what are you doing to help green the grid?
DC: Renewable energy is definitely going to play an increasingly important role in Alberta (and Canada) as we approach 2050. We are seeing more wind and solar coming on board, which is driving lower prices in the market. Our commitment to renewable energy includes the Solar Club, but we have taken it one step further by empowering Albertans to green their consumption in an affordable way.
All customers, regardless of whether they can afford to install solar PV systems on their homes or not, can resupply the grid with renewable energy through our Renewable Energy Certificates (RECs).
Customers simply need to choose a percentage of their consumption to be replaced in the grid from renewable sources. You may not be able to consume purely renewable energy, but we can all shift the balance in the grid from thermal sources over to renewable sources. We have made greening the grid affordable, and encourage people to green what they can afford. For an average homeowner to green 10% of what they import during the month, it only costs 1.66 cents per kWh, which works out to only 4 cents per day.
8. Family-run businesses can provide benefits and challenges; do you enjoy the family dynamics?
DC: I love that we operate as a family-run business, and we do so in multiple senses of the term. UTILITYnet was founded by my mother Madeline Low, and I intend to continue that legacy into the future. My father, uncles, cousin, and husband have all worked for the company at one time or another. But it’s more than just passing the torch from parent to child; we also function as a family. As a small business, it is vital that we look after each other and care for one another. We treat our staff like family, which means sometimes we argue, but we always find a way through, no matter what.
9. What is next on the agenda for UTILITYnet?
DC: Next on the list is an expanded investment in Business Intelligence (BI) reporting services for both our Industrial Oil & Gas customers as well as our residential customers.
We are also expanding our network of Community Retailers to better represent local municipalities. We want customers to be able to choose a retailer that represents their local interests, not a balance sheet overseas or south of the border. Our goal has always been to reach 50 Community Retailers by our 50th anniversary, which is coming up in a few years.
10. Is there anything else you would like to add?
DC: Life is good! However, we foresee problems on the horizon.
As you know, we are independent and private company. The vision, strategies, and growth over the last four decades has been charted by the company's founders, Madeline Low and Nick Clark.
Fundamentally, consumers should not pay more for distribution and transmission costs than the energy being consumed. Hidden costs and artificial fees need to be eliminated and there should be more open transparency. Until the AESO restructures the market's supply and demand fundamentals along with wholesale pricing, it is premature to implement changes to the retail market. The government is courting unintended consequences by restructuring the RRO and redefining it as the Rate of Last Resort (ROLR). This move is premature and flawed; their time would be better spent designing a rate-based system to help vulnerable Albertans.
As we head toward our 50th anniversary, the problems with the market are concerning, but we're confident that those issues will get resolved by our current government. That being said, we are proceeding down the road of a family-based succession plan. Nick and Madeline's message to me was simple: Be smart, be innovative, don't be afraid to make mistakes, and have fun!