Direct Energy, a Houston-based retail electricity provider serving major deregulated US markets, has set forth plans to purchase existing retail electricity provider companies in order to further expand business.
As one of the fastest growing retail electricity providers in the country, Direct Energy had an operating profit of $526 million last year, up 5% from 2011. Already, the company is the third largest provider in Texas. Centrica Energy – Direct Energy’s UK-based parent company – looks to double its subsidiary’s profits within 3-5 years through organic growth and by strategically acquiring companies that deliver synergy and economies of scale.
For ratepayers, this could mean even lower competitive rates than what the company already offers. By using the expertise, existing customer base, and other resources of acquired companies, the electricity provider may be able to source electricity at even lower prices in order to sell back to customers at lower rates.
Consolidation Likely to Increase as Market Matures
The retail electricity market is a fairly new concept in deregulated areas of the US. In the late 1990s, many states opted for deregulation, which opened the market for retail supply competition. Since the early 2000s, hundreds of these providers have sprung up across the country. As the market has not yet to mature, it is fully expected that many of the companies will be bought out or go out of business due to heightened competition.
Retail electricity providers that have the financial backing and strong growth strategies will be the companies that survive and thrive. Direct Energy’s parent company’s backing and experience will most likely allow the company to stand out among competition to become an even greater leading player in the retail electricity market.
There’s no word thus far on potential companies that may be bought up, but due to the fast-track, 3-5 year growth plan, we expect to hear a lot more about Direct Energy’s plans in the near future.
To find out if Direct Energy is an available provider in your area, type your ZIP Code into our free Compare & Switch tool at the top of this page. You’ll be able to compare Direct Energy’s rates and plans with other available providers in your area. There’s no obligation to switch, though you may conveniently do so through the tool.