November 5, 2008 admin

Ambit Energy buys Commerce Energy

Why buy Another Electric Company?

Commerce Energy selling their business to Ambit Energy is a good thing. There are many electric companies in Texas right now struggling to stay in business and there have been dramatic changes on how some electric providers now compete for new business. A few electric companies have even stopped taking on new customers as they determine how to hedge the electricity they sell. Electric prices in Texas are so volatile it requires an electric company to have a lot of capital on hand and a disciplined fundamentally strong commodities trading desk. Ambit Energy is an MLM electric company which sells electricity through a large direct sales force. The sales force they have has to pay in each year (correction: only a one time $400 payment needs to be made) in order to qualify to continue to sell for Ambit as well as receive commissions. If you decide to join up with Ambit Energy to sell their electric service you will have to pay around $200 – $300 depending on the promotion they may have going on. This added money paid into Ambit just to sell the electric service helps keep a company like Ambit profitable with little risk and exposure to the volatile Texas electric market (these payemnts are fed back in to their sales force through bonuses and fast start commissions). Since it is risky to sell electricity in Texas as a new Texas electric provider it makes since to attempt to market and sell in the most affordable unrisky way possible. Ambit Energy has accomplished this and basically rode on the coat tales of Ignite Energy which started the MLM direct selling of electricity in Texas. Now Ignite Energy has seen a steady drop in enthusiasm while Ambit has become the name most heard when it comes to selling electricity as a home based business opportunity. Commerce Energy may have found themselves becoming unprofitable due to any number of factors. They may have not had enough capital for selling long term contracts because of skyrocketing electric prices, they enrolled too many credit risk customers who then defaulted on their electric bill, or some other reason, we really don’t know why they sold but Ambit is smart to buy them up and I will tell you why.

High Customer Churn Rate in the Deregulated Utility Service Markets

Ambit Energy, just like, Ignite, Excel telecom, Amway and similar companies like them many times experience a high customer churn rate as their followers who are also their customers and sales agents become dispassionate about the product or service they sell. They drop out of the company after a few years and do not attempt to resign their family and friends they may have asked to help them with their home based business opportunity. This is not always the case with this type of direct sales company but many times it is especially in the utility services industry. By Ambit buying up traditional seasoned electric providers during their succesfull period it may help them stay in business for the long haul. Without an outside marketing effort through tradional channels it may be hard for Ambit to keep the electric service customers in Texas they currently have.

MLM and Texas Electric Companies

Some of the other MLM work from home opportunities in the Texas electric service market are with Ignite Energy, Green Mountain Energy, Zurvita Energy, Affordable Energy, and Cirro Energy. New Age Power Brokers is a slightly different take as they are more of an affiliate program than an MLM company offering brokering opportunities to sell for Glacial Energy. Green Mountain Energy, Affordable Energy and Cirro Energy are tradional electric companies that have toyed with MLM marketing to try and increase their market share after seeing the huge success that Ignite Energy had when they started back in 2002. There are sources that claim Ignite Energy had at their peak close to 400,000 electric service customers.

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About the Author

admin Donny started ElectricityBid.com back in 2007 from his parents basement and has since married his wife Melody and had three sons, John Adam (7) and Noah (4) and our new 20 month old son. He enjoys tech related things, softball, kickboxing, going to the gym, excursions and activities together with his wife Melody. Our service allows you to shop and compare commercial and residential electric rates and providers. Would you take the time today to try our service and see how you like it. Thank you! and God Bless You!

Comments (6)

  1. A lot of other electric providers in Texas are in trouble because they have debt and some of them spend up to $1.6M per DAY in advertising costs. Even Reliant Energy is looking to leave the retail market in Texas. Why? They have strong competition, they pay too much in advertising, their customers are not loyal, they are in debt, their debt was financed through Merrill Lynch, their debt was refinanced at 3.5x the rate it was at. Ambit is debt-free and doesn’t pay for advertising.

    Ambit is a franchise-like business. You have a start-up cost (with NO annual renewal) and a small monthly overhead. You can become profitable in less than a day. Compare that opportunity to something like a Ben & Jerry’s franchise. Go to their website and see how much it costs. It is almost $500,000 out of pocket. It will take you a while to even start breaking past your monthly costs and start making positive cash flow, much less how long it will take before your original investment is covered and you actually start making a profit. Ambit is so much better than that.

    Some more erroneous information that you have is the customer churn. Ambit was actually praised by the Texas Public Utilities Commission for having such a low turnover rate. The great majority of Ambit’s customers are very happy and therefore loyal.

    Ambit is not an illegal pyramid scheme. They have been looked at and approved by the utility commissions in four states. Shell had their team of experts look over everything with a fine-toothed comb before asking Ambit to partner with them. BTW, they just recently renewed that strategic partnership. David Biegler, the former COO and President of TXU, retired from that company and came to Ambit asking to be an investor and advisor. None of these would have anything to do with Ambit if it were a scam.

    Speaking of pyramids…did you ever consider that the CEO of a major corporation makes millions (even when he does a bad job and gets fired), the other executives make a little less, the management levels even less, and the individual contributors never even make close to what the executives make? Sounds like a pyramid to me. Not illegal, but still a pyramid.

    BTW, did you know that Ambit customers now have the ability to earn a credit on their energy bill that can reduce or even eliminate that monthly payment by simply referring other customers? So…you can become an Ambit customer for free, enjoy very competitive rates, get a free 3-day/2 night hotel stay, earn travel reward points every month, refer some friends/family and get a free cruise, refer a few more and get a credit on your energy bill. Even better—the credit is applied every month! That means an average family in Texas can save about $3,000 a year! If that same person had decided to become a consultant too, then they would also be making a residual income off all of those referrals every month.

  2. I’d like to take exception to something you stated in your article regarding Ambit Energy. The initial cost to become an Ambit Consultant is a One Time Out of Pocket expense of $429.00. We don’t have to re-up each year to remain qualified. You have us confused with Ignite’s plan. However, in fairness, I believe in response to Ambit, they (Ignite)discontinued their practice of an annual re-qualification requirement.

    Another erroneous statement made was that the initial fee paid in to become a consultant adds to Ambit’s profit margin. Reality is, 100% of that money is paid out in Bonuses to the field.

    Probably the biggest factor in our profitability is our Patent Pending Proprietary Energy Purchasing system, designed by Jere Thompson. This system allows Ambit to forecast our energy needs with a 1% margin of error. This compares to the industry average of around 20% for other providers.

    In addition, our customer acquisition costs are virtually zero, because Ambit doesn’t spend millions of dollars advertising. They pay commissions to the field only when a customer pays their bill. Therefore, no money is wasted on hopes of acquiring customers. We don’t get paid unless we actually acquire a customer AND they pay their bill!

    On the subject of stability, Ambit has been chosen to partner with Dutch Royal Shell, the third largest company in the world, 2nd most profitable. This alliance gives us the ability to purchase electricity up to a year in advance. Many companies struggle to buy it two months in advance as is required by the PUC.

    Also, by the way one other key difference between Ambit, Ignite and Zurvita…Ambit is the actual Retail Electric Provider, not a marketing arm reselling another company like Zurvita and Ignite. Zurvita is marketing for MX Energy and Ignite represents Stream Energy. Ambit is just Ambit.

    Hope this clears up some of the mis-information.
    Thanks for the opportunity to set the record straight!

    Terri Hammack
    National Consultant
    Ambit Energy

  3. Energy Deregulation provides unlimited opportunities for everyone to earn money by, essentially, selling energy. This is an opportunity that is unprecedented and it promises to be one of the greatest home based business opportunities available . Not only does RetailEnergyConsultants.com show people how they can save money on their own energy bills; but, also shows people how to sell the same opportunity to others, and make money, as well. Join Now

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  4. Ryan

    Thank you Terri, for your verification. I just wanted to know pros and cons between these companies before making decision.

  5. Real Energy Consultatn

    Terri,

    You speak like a true MLM’r. Ambit energy is a joke and a scheme. Anyone who would pay $427 just to sell their product which they are ALREADY making a good profit from is ludicrous. You all should be shot. Oh and by the way Ambit is NOT the ONLY one who has partnered with Royal Dutch (Shell). There is another who has Star Tex. Do not unwisely spend your money buying that Ambit crap. Just to put things into perspective for you.

    Say a company or residence is paying 10 cent per kilowatt back in 2007 and they signed a contract or are going month to month (makes no difference). This year in Texas depending on which part you live (some areas lower or higher than others) you can get rates for 7 cents. So this is where they really nail you BESIDES the entry fee you pay of over 400 dollars. So they can sign you up say for 8 cents per kilowatt per hour. That means they tagged 10 mils on it. And let me tell you folks 10 mils on something is substantial depending on how much they use.

    In my opinion you guys working at the bottom for either company are SUCKERS and those at the top can burn in hell. My hats off to you for getting people sucked in but seriously f u.

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