Pre Buy Electric Company Profile

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Another Texas Electric Company down, Hit by Unhedged Energy and skyrocketing prices

Today it was announced that Pre Buy Electric has gone out of business. The way this company sold energy is pretty obvious from their name. The Texas electric provider would have their customers pre pay for energy so there is no need for a deposit and if they havn’t paid a previous electric company, well no problem you have to pre pay with Pre Buy Electric so the choice was simple for many people. One of the down falls of Pre Buy Electric Company wasn’t the fact that they had a customer base of about 9,000 bad credit risks because these customers bought their energy in advance so the risk was minimal to Pre Buy. The issue once again is bad risk management. What I mean by risk management is that Pre Buy Electric Company did not properly hedge their energy in the Texas market. In order to insure you make money and don’t expose yourself to a high level of risk an electric provider in Texas has to buy natural gas futures and then hedge this energy in case of any potential price volatility that puts their profit margin into backwards teritory. No one wants to lose money after selling an electricity rate to a customer but that is what several companies have done by putting themselves into the position of having sold energy without hedging it expecting the market to stay in a particular safe territory.

If you are one of the unlucky ones that were taken off of PreBuy Electric by the Texas government and put on the POLR rate you are paying a high inflated electric rate. You want to start shopping for an alternate electric provider as soon as possible as you will not want to pay a full months electric bill at the POLR rate. The POLR electric rate was created by the Texas grid operator as a back up plan if an electric company were to go out of business. We were told by Prebuy that they have not filed for bankruptcy but it looks like they may be scrambling to do something like this pretty soon as they have lost all of their 9,000 energy customers. Read below for low cost electric providers who will be happy to get you off the POLR rate and onto a more competitive electric price. Keep in mind that over 5 differnt electric companies in the months of APril May and June have gone under for similar reasons. It is important to pick a good provider. As of June 4th Etricity Electric Company is the latest provider to go under leaving 15,000 searching for a new Texas electric provider.

I am a PreBuy Electric Customer, What Should I Do?

PreBuy Electric has right under 9,000 customers which were switched to POLR or the provider of last resort at an inflated electric rate.* In Dallas Fort Worth the POLR company is TXU Energy and in Houston the POLR company is Reliant Energy. The POLR company was established as a back up so that if an energy company goes bankrupt the customers with that Texas electric company do not lose electric service. PreBuy ELectric failed to pay their financial obligations to the Texas grid operator, (The Electric Reliability Council of Texas) and were forced into bankruptcy. If you are a PreBuy Electric customer you want to shop for a competitive Texas residential electric provider as you are on the POLR uncompetitive rate that is meant as a temporary solution so you are not without power. The Texas POLR back up plan is a great idea but is only a temporary solution and is higher then the going competitive market rate.

The Texas Power Companies History

The senior business partners at PreBuy Electric pioneered the prepaid electric market in Texas and have been committed to remain the largest prepaid Texas electric provider. Prebuy Electric serves thousands of customers across Texas. PreBuy Electric was based in Bridgeport TX and is now in Grapevine Texas, PreBuy Power is led by an experienced team of energy managers who are experienced in the deregulated electric market. The pre paid electric provider uses innovative software, that appears to have given them some bad fundemental or technical signals, which was used to keep electric prices as low as possible for their customers. This company never charges a deposit and all Texas customers qualifies for their electric service. Prepay Electric’s slogan is “The PreBuy Advantage”.

Fly by Night Texas Energy Providers in a Similar Situation

Well the electricity market is at a 3 year high in Texas and Pre Buy Electric is not alone in a list of scandalous Texas electricity activities. Riverway Power sent out a notice to their customers that they would not be honoring their electric customers fixed rate energy agreements but would instead be raising the electric price much higher. In the middle of May 2008 not but a few days ago National Power Company had found themselves in a similar unhedged position as Pre Buy Electric. National Power also sent out a letter and told their customers that they coul not honor their fixed electric rate any longer but would be raising multiple fixed rate term agreements from around 11 cents kWh to 15 cents kWh. These issues have since been dealt with in short order by the Public Utility Commission of Texas, thank goodness.

Unable to Pass on Higher Electric Rate Costs

Pre Buy Electric is one of those electric companies that cannot pass on the cost of an unhedged energy rate as their customers never signed a term agreement and can get out at anytime. Of course, it is illegal for an electric company to break a fixed rate agreement but several have tried and been succesful. Recently Riverway and NPC tried to pass on their unhedged energy costs but the PUCT told them they must eat their losses. It makes you wonder of Pre Buy Electric will soon have Riverway and National Power Company following suit? I suspect many of Pre Buy Electric’s customers in Texas left when the rate got so high they couldn’t realistically justify paying such a high rate in comparison to paying a reputable electric company a small $200 – $500 deposit rather then pay an energy bill that would pay that and more in just a few months. It made sense for many of Pre Buy Electric’s customers to leave and find a cheaper electric company even if there was a deposit required. The deposit for most providers helps protect them from customers who never intend to pay their electric bill in the first place which happens more often then you would think. Some providers charge such a high deposit that it discourages anyone who would even think about not paying from even signing up.

Alternative Electric Provider for Pre Buy Electric Customers

If you need an alternative electric company besides the now bankrupt Pre Buy Electric we recommend a very good low cost Texas energy provider who has ethical business practices, a low electric rate, quality customer service, and I use them myself. They are a large electric company in Texas and are offering a discount electric rate to Pre Buy Electric Company customers. The name of the electric provider is Startex Power. You can sign up on their online discount electric rate below.

Pre Buy Electric Detailed Company Profile

Detailed Pre-Buy Electric Company Profile
Pre-Buy Electric is a private company located in Grapevine, TX.

Pre-Buy Electric’s line of business is Texas electric services.

Company Profile: Pre-Buy Electric
Year Started:2005
State of Incorporation:N/A
URL:(www.prebuyelectric.com)
Location Type:Single Location
Stock Symbol:N/A
Stock Exchange:N/A
Also Does Business As:N/A
NAICS:N/A
SIC #Code:4911
Est. Annual Sales:$130,000
Est. Employees:1
Est. Employees at Location:1
Contact Name:Criag Bolin
Contact Title:Owner
Contact Phone Numbers and Emails for PreBuy Electric Company
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This company has been confused with the names Prepaid Electric and Prepay Electric, but is actually called Prebuy Electric which is very close in name and meaning.

*information gained from Tom Fowler with the Houston Chronicle: (http://www.chron.com/disp/story.mpl/headline/biz/5789933.html)

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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