Pre Buy Electric of Texas, Bankrupt, Yes No?!

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Today Pre Buy Electric of Texas has Gone Bankrupt or Have They?

Wow, Texas electricity rates are at a 3 year high right now and with electric companies breaking fixed rate contracts on their customers it is no surprise that Pre Buy Power also known as Pre Buy Electric has gone out of business and had all 9,000 electric customers transferred off their electric service and onto a higher electric rate managed by the government which is called the POLR rate. In Houston, Reliant Energy provides the temporary back up rate until the consumer decides to shop for a competitive offer. You don’t want to stay on the POLR rate to long as it is just a back up and much higher then try some other competitive offers with reputable electric providers out there.

This electric provider was not operating their business correctly as far as the hedging of their energy, risk management and the credit risk of their customers. Having your customers pre purchase their energy definitely helps as positive insurance you will receive payment from your customer base but then speculating on the energy market without hedging your energy leaves your electric company to really high levels of exposure to market volatility. The energy provider was forced into bankruptcy (according to PreBuy company associate they have not yet filed for bankruptcy) by ERCOT (The Electric Reliability Council of Texas) because they were not able to meet their power payment obligations. PreBuy Electric customers were switched to the Provider of Last Resort (POLR) over the weekend by ERCOT so they would not be without electric service. In the Dallas area the POLR company is TXU Energy and in Houston it is Reliant. The POLR electric rate is a higher inflated rate and is only temporary. A PreBuy customer on the POLR rate is encouraged to sign up with a competitive electric provider ASAP to avoid paying a higher then the average electric bill they may be used to.

We are asked quite frequently for a recommendation of an electric provider like Pre Buy Electric Company that will let you into an energy contract with no or a low deposit and the best one right now is a Texas electric company by the name of Bounce Energy. Bounce guarantees you can sign up on their “no or low deposit plan” to assist low income low credit score customers, Click Here and Check Rates and Sign up Now. If you have decent credit history some providers are more lenient then others. In rare circumstances some electric companies will allow someone else to personal guarantee your residential electric contract but that is very rare. The pre buy energy option is one way to avoid a deposit and besides Pre Buy Electric Company I know of no one else who offers this arrangement. Some Texas electric providers offer lower deposits then others and some consider one credit score passable while another one will want a deposit. We recommend Startex Power for those needing a low rate with a relatively low deposit if they even end up requiring one. For a guaranteed no deposit electricity choice we recommend going with Bounce Energy.

The Irony of PreBuy Going Bye Bye

I was talking to my brother today about PreBuy who sells Texas prepaid electric service and how ironic it is that they have their customers prepay for their electric service but they themselves had bad execution of some sort and went bankrupt because of it. An unhedged energy price is basically like never locking in on a set price so you are completely exposed as to whatever the market may do. Ouch they got hit, and so did a few other electric providers who tried to sell electricity without hedging their bets. The PUCT came down on a couple of these companies but Prebuy was one of those electric providers that just couldn’t eat the loss. Riverway Power and National Power Company found themselves in a similar situation and the word is still out on if they will be able to stay in business since the PUCT would not allow them to pass the loss on to the customer.

No Credit, No Problem Appears to be the Mode of Operation

The way Pre Buy Power has setup their business model is to let energy customers into an agreement by having them prepay for electricity. The problem once again is that they were selling unhedged energy to credit risk customers. It takes a smart cookie to run a Texas retail electric provider as you have to have well trained energy trading experts who know how to buy and hedge natural gas futures while maintaining a healthy risk management policy. Some electric providers like Pre Buy Power can make a bundle by betting that the market will go their way while selling unhedged energy and these electric companies could potentially make a lot of profit for years and years. The problem is that when companies like Pre Buy Electric leave themselves exposed with no risk management policy firmly in place they will eventually get burned. Unfortunately Pre Buy Power has sold their last energy contract unless they restructure and go at it again.

Pre Buy Electric Company Website Still Shows Open for Business?

We checked to see if (prebuyelectric.com) was still open for business or atleast had some type of news worthy information but everything appears to be business as normal as far as the site goes. I tried calling every number available on the site but could not get through. All indications is that the company doesn’t have plans to start back up anytime soon. If you need an alternative electric company to Pre Buy Electric Company that offers a low deposit then we recommend Bounce Energy of Texas. Bounce usually lets you in at a reasonable deposit if you have bad credit. If you pay on time for the term of your contract they may let you renew with no deposit at all. As far as Prepaid electric service in Texas we know of know other company besides PreBuy that offers this option.

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