First Bite: How the Utility Business Model Could Eat Itself

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Consolidation of the electric utilities has become a key strategy for companies like Exelon. As long-term energy profits are threatened by the high level of customer energy empowerment, teaming up makes sense. But now comes a new challenge in the form of technology-driven startup utilities like Drift. An algorithmic, big data-approach to rates and the promise of bureaucracy-free policy sounds promising. I can’t help but wonder how it will play out.

Deregulation saw to the physical business separation of generation and distribution companies. But investor owned utilities of both kinds are commonly owned by one big organization like Exelon or NextEra. All monies and decisions would seem to flow to the same place. How does Drift fit in? As a customer, I want a utility that can fix my wires when a storm destroys them and provide best rate possible. It’s unclear how far we can dilute the market before reliability is impacted. Profits are required to make future investment possible and insure all parties stay motivated.

In times like these I focus on the basics. Utility infrastructure was built around communities where aggregation of consumers provides the financial basis to justify investment. Think of Thomas Edison and JP Morgan powering New York city. That system of electricity has become integral to our way of life, to the extent that it forms the basis of our economy. We must be cognizant of how we allow the business case to be eroded.

To that end, ProtoGen embraces a new way of thinking and technology, but also stays grounded in the practicality of accountable and reliable energy services. If you’re a utility company or other interested party, reach out and let’s talk vision. A new perspective could mean the difference between success or more competition.

In the private beta the company ran before its general launch today (in New York), Drift saved customers an average of 10% on their utility bills and savings can reach 20%. Those numbers may increase over time.

The way the company makes money is through a monthly subscription fee that it charges customers for their power. The company keeps costs down and makes a profit off of the difference between the amount of money a customer spends per month and the bulk power purchases that Drift spends on supplying customers with power.

TechCrunch, “Pointing the way to the power grid of the future, Drift launches a low cost utility in New York”