MXpressions on Energy and the Environment

The Search Generation

2009-06-15T16:38:00.000-04:00

It will come as no surprise to say that we are in the midst of the graduation season.

Whether or not you have a graduate in the family, the signs are hard to miss: Well-dressed teenagers exiting limos in formal dress, or cheerfully taking pictures on their way to Prom; front page pictures of the President and other notables in cap and gown; uniform white caps flying into the air at the Naval Academy; station wagons driving by with flapping balloons and “Seniors” spray painted on the windshield.

At a certain age one begins to stare at these freshly minted adults and think, “What now?”

Where are they going? Where will they be twenty years from now? Will they still have those exuberant expressions? Or will their brows be furrowed with worry, their teeth clenched with anxiety?

And after a passing memory or two of how painful those high heels must be for the girls in dresses, or how sweltering it is under those gowns, the thoughts will continue: “How does this generation think? How will they act? If faced with the threat of war or economic misery, what will they do?”

Since Tom Brokaw dubbed the generation that fought World War II “The Greatest Generation” it has become fashionable to question whether today’s young people are capable of the same dedication and civic mindedness. It is common to hear people refer to an entire generation – the Millennial generation, or Generation Y, born in the 1980s or early 90s – as selfish, self-absorbed, spoiled and insincere.

Raised in a world of rapid internet communications, it is said that instant gratification is a necessity. Raised in a politically correct world where everybody has an equal opportunity to get the trophy and there “are no losers,” it is claimed that they have no drive, no competitive instinct, no initiative. Everything will come to them eventually, so why sweat it?

In his book A Moveable Feast, Ernest Hemingway recalls a conversation with Gertrude Stein in which she referred to the generation that returned home from the killing fields of northern France in World War I as the “Lost Generation.” Would she have said the same today? Are these a “Lost Generation.”

Recently I watched as a group of young people sat on stage patiently, waiting for their names to be called to receive academic honors. I watched the pride of their teachers as they called their names to present them with the awards they had earned. I watched the students’ poise as they walked to the podium, politely accepted their prizes and returned to their seats.

And then I thought about last year’s graduates. The tens of thousands of young Americans who walked down to the recruiting office – we have no draft, mind you – to enlist in our volunteer armed forces. The 35,000 applicants for positions in Teach for America, the program that sends young college graduates into inner city schools to share their passion for education. The hundreds of thousands of young men and women who have taken jobs, many in family owned businesses, some far from home, beginning responsible lives as citizens, setting down roots, starting families.

These are not a “Lost Generation.” They may not be the ”Greatest Generation,” as Mr. Brokaw dubbed WWII veterans. But don’t tell me they are selfish or self-absorbed. They are their own people: Independent, creative, and motivated. They are smarter by far than their forebears, they have a greater grasp of the world than we ever did and they are acutely aware of the challenges and threats they face.

And if, and when, the day comes that they are put to the test and called upon to defend our freedoms and our way of life, they will rise to the occasion because they appreciate what they have. Look into their eyes. Watch them walk across the stage. Hear their voices. Share their pride.

They may be innocent of what lays ahead, but they are not naïve. They may be inexperienced, but they are not unprepared. They may not know everything, but they know they have the skills to learn. They may not have seen the world, but they are intent on exploring farther into space and deeper into the atom.

They are, if anything, the Search Generation. The generation ceaselessly gathering knowledge, whether through Google, Facebook, Blogs or Twitter. Their goal, as with Tennyson’s Ulysses, is “To strive, to seek, to find and not to yield.” They will find new and non-polluting sources of energy because they must; they will find ways to feed the world’s hungry because they can; they will spread the values of liberty and freedom because they will want to share them.

Undoubtedly, when these graduates are older they will look at their children’s generation with the same quizzical expressions as we do today. And around the same time, those of us lucky enough to be around will take them aside, put our arms on their shoulders, and chastise them for entertaining such foolish doubts about their kids.

As the Search Generation marches to the podium to accept their diplomas I, for one, am standing and applauding.

Move Over, Mr. Newton

2009-06-06T15:42:00.001-04:00

Isaac Newton is remembered for his brilliant insight while sitting under an apple tree. The blow from the falling fruit must not have been so bad. After all, Newton followed up his discovery of the laws of gravity with his Three Laws of Motion.

I was thinking about Newton’s Three Laws of Motion the other day as I pondered energy prices over the past year. It was then that I had my own flash of inspiration: Newton was wrong!

For one thing, this absurd law of gravity is preposterous. As anybody in the world of energy knows -- as any driver pulling up to a gas station experiences weekly -- what goes down must come up! Anybody remember $.79 cent gas in 2002?

As for Newton’s Three Laws, the ones that scientists say define the universe? The ones that make Newton more influential among scientists than Einstein? Balderdash! Let’s consider them, one by one.

Silly Law No. 1
Every object in a state of uniform motion tends to remain in that state of motion unless an external force is applied to it.

Hello? Has anybody looked at a chart of energy prices lately? They make the Rocky Mountains look like Kansas. Millions of people use energy daily for everything from heating soup to watching television. Their use is constant, persistent, and insatiable. Even Al Gore can’t do without air conditioning. Try to eat a hamburger that hasn’t been cooked. Ugh.

So with all this constant demand for energy, why aren’t prices constant? Because Newton was wrong, of course! Prices bounce around like a Karaoke ball singing the Rolling Stones’ “Satisfaction.”

Energy prices will continue to change whether we like it or not. They will go up or down for no reason. And there ain’t nothing we or any external force can do about it.

Silly Law No. 2
The relationship between an object's mass m, its acceleration a, and the applied force F is F = ma. Acceleration and force are vectors; in this law the direction of the force vector is the same as the direction of the acceleration vector.

Look, I wasn’t born yesterday. Last year when crude oil was trading at $147/barrel and natural gas was over $13 per thousand cubic feet, the vector (i.e., direction) of energy prices was up, up and away! Practically every analyst on Wall Street was predicting $200/barrel crude oil prices (and $5 gasoline) by the end of the year.

Where are we today? Crude oil below $70/barrel (it got as low as $32.40), natural gas to $3.155. Demand was constant, shortages were pervasive, prices were going one way: Up! Today prices are down and the bears are out in full force, predicting the end of the world as we know it.

Of course, Newton’s Second Law is as true as it was before. Not! Prices are going right back where they went before, into the stratosphere (where, incidentally, Newton spent some of his free time contemplating the laws of celestial motion).

Silly Law No. 3
For every action there is an equal and opposite reaction.

This one really takes the cake. This may work on the playground -- push the kid and you get punched -- but in the energy world it’s loony. Ever watch the sparks fly from a sparkler on the Fourth of July?

Actually, a better example would be a two year old after losing a balloon. There’s an action (lost balloon rising into sky) and a reaction (red face, stomping feet, shrieks of uncontrollable frustration and anger). Equal and opposite? Hardly.

Like a toddler, energy prices are highly emotional. Sure they respond to supply and demand factors: Hurricanes in the Gulf of Mexico that threaten offshore production or steamy summers and frigid winters. But they also respond to perceptions and fear: A faltering economy, the prospects of war in the Mideast, weather forecasts and speculative trading binges.

Now that we’ve demolished Newton’s Three Laws of Motion, I present you with the True, Sublime, Incontrovertible Laws of Energy:

1. Energy prices a year from now will be either higher or lower than they are today, but not both at the same time.
2. Energy prices will go up or down when nothing happens.
3. Most people will not turn down their thermostats when it’s cold outside or turn them up when it’s warm.
4. Politicians will continue to talk about energy supply and nothing will be done about it.

There you have it, folks. The universe in a nutshell.

And by the way, be sure to look down or you might get hit by that apple on the ground!

Winston Churchill and Me

2009-06-04T15:17:00.000-04:00

Sometimes one has an experience that is so novel and extraordinary that you can’t wait to share it with all who will listen. When I experience such a moment, I find myself blurting out: “Now, that’s one for the memoirs!”

Not that I plan to write my memoirs. Don’t get me wrong: I love reading memoirs and biographies. But the idea of writing my own strikes me as just a bit presumptuous and, well, old. Unless one has the kind of dramatic life story that takes you to the White House or perhaps an Academy Award by the age of 20, the memoir thing is likely to be a dry read. Even a Medal of Honor winner like Audie Murphy and a World War I flying ace like Eddie Rickenbacker needed to put a few more notches in their belts – say 44 movies in the former’s case or a racing car career in the latter’s – before the story had enough pizzazz to merit a good beach read.

But that doesn’t mean that I can’t dream. And last week I had one of those “one for the memoirs” moments that I need to share with you.

A good friend invited me to join him to hear one of my heroes speak at a club in Houston. Actually, the speaker was the grandson of one of my heroes, but who’s going to quibble? Winston Churchill left us in 1965 but his grandson Winston S. Churchill is still with us and when the grandson speaks it is with the compelling force of personality that people must have felt listening to his grandfather in 1938 when he warned of imminent storm clouds over Europe.

So I sat in an ornate room of a venerable club, the kind of club where one can retire to the smoking lounge and sip a Gibson and imagine that the rest of the evening will consist of seeing a new double feature starring some hot new stars like Lana Turner or Humphrey Bogart.

Lunch consisted of pheasant and Yorkshire pudding. This was a nice change of pace for the audience, perhaps, although I suspect our speaker would have preferred a hamburger and fries. I’m not sure what was served for dessert; our speaker was so mesmerizing I don’t think I touched it.

Mr. Churchill is a former journalist and Conservative member of Parliament whose most interesting claim to fame in my view was his circumnavigation of the African continent in a single engine plane the year he graduated from Oxford. He recounted that despite his frequent exposure to wartime danger the only time he was ever roughed up was at the 1968 Democratic Party Convention in Chicago. Evidently the police challenged him as he tried to enter the Blackstone hotel on Michigan Avenue. “Who are you?!,” they demanded. “Winston Churchill!” he replied. “A likely story!” they replied and beat him over the head with a nightstick until the abashed hotel desk clerk confirmed that he was, indeed, Mr. Churchill.

Churchill spoke eloquently about his concern for western security, in particular the threat faced by terrorist cells, demographic changes in Europe, and nuclear weapons in Pakistan. He expressed fervent hope that the new administration in Washington would succeed in its foreign policy, but said he did have one serious reservation: That President Obama returned to England the bust of his grandfather that apparently has sat in the Oval office for decades.

Now for the “memoir” moment. At the end of Churchill’s talk I remained standing in a small group listening to him answer some questions. A gentleman walked up to him and reached out his hand.

“Mr. Churchill,” the man said. “I’m Paul Clemenceau, great-grandson of Georges Clemenceau.” Georges Clemenceau was prime minister of France at the end of the First World War and later one of the principle negotiators of the Treaty of Versailles, along with England’s Prime Minister David Lloyd George.

Churchill looked at the man and smiled. “How nice to meet a Clemenceau,” he said. “What a small world.”

Now that’s one for the memoirs!, I said to myself. I was witnessing the grand arc of history. In 1918, as the German army unleashed one of the fiercest attacks of the war, Lloyd George sent Churchill to France to find out what was happening. There Churchill met the French Prime Minister and Clemenceau fearlessly took him to the battle front. Churchill, a tested battlefield veteran, protested that Clemenceau was putting himself in danger. “C’est mon grand plaisir,” Clemenceau responded. “It’s my great pleasure.”

To think: Could Clemenceau have guessed, at that moment, that 90 years hence his own great grandson would meet his companion’s grandson, in a private club halfway around the world?

Another Technological Advance

2009-06-02T11:57:00.004-04:00

I looked up the other day from my BlackBerry. Or was it the iPhone? I can’t recall which.

I was crossing the street, probably oblivious to oncoming traffic. I was rushing back to my office. There I looked forward to opening up a .pdf file, a document that was sent in a format compatible with my Acrobat Reader program. One of our lawyers was waiting for me to review the document and make comments.

I planned to open the document on my desktop. I was thinking that if it were too long to read I might copy it to my laptop and bring it home to review that night sitting at home on the couch. While my son watched Law & Order I could read the draft carefully. If the comments were too many, I might ask my lawyer to send it to me in a Word format. That way I could mark it up on the screen and return it to him in the morning.

As I crossed the street, I passed a bus shelter on the side of the road. Sitting on the bench was a man waiting for the bus. Something caught my attention. I know how fast these new technological innovations come and go. But I was so struck by this new breakthrough that I wanted to hasten to bring it to your attention.

The man on the bench held in his hands a large object. Maybe a foot and a half across, a couple feet long, it seemed to be made of linen, or cotton, or perhaps a synthetic material. All I could tell was that it did not hold its shape for very long. It seemed to flap in the breeze, even crinkle from time to time like crushed velvet, shadows coming and going across its surface.

I paused on the curb to see what I could learn about this new device. I watched the man stare at it intently, holding the object in front of him and focusing his eyes on it as if he were reading some kind of huge cell phone. After a moment, he reached his hand across and unfurled the object to twice its width, then snapped it backwards so that it was half the size again. He looked at it even more closely and as the bus pulled up to the shelter. Suddenly, I saw him quickly fold it so that its size was the size of an old-fashioned book and tuck it under his arm as he climbed the steps.

How novel, I thought. A new technology, one which I think I have heard about but not yet seen. I believe it is being called a newspaper, an interesting cross between a PDA (personal digital assistant) and a Kindle (Amazon’s new electronic book gizmo). Larger than either of these, the so-called newspaper seems to allow one to scan a number of stories at once. Instead of seeing only one story in a space about the half the size of a pack of cigarettes, the reader can actually scan dozens of stories and pictures as well. Indeed, the pictures are instantaneously accessible and do not require a long time to upload.

As I sit here at my desk in front of my flat screen, I am truly envious of that gentleman on the bench. I’m sure that this new technology must be frightfully expensive, but I look forward to the time when its price may drop to, say, $200 or less so that I might experiment with it.

Who knows if this new technology will survive the onset of competitors. It may be gone in a few months. If so it may go the way of floppy disks and fax machines. Sort of the way Twitter seems to be going. Today’s hot new gadget. Tomorrow’s quaint techy memory.

Or then again, the newspaper may catch on. And my friend on the bench will have been a pioneer. And I will tell my grandchildren about when I spotted the first newspaper, in a bus shelter, while looking up from my BlackBerry.

Or was it the iPhone?

A Moment

2009-06-02T10:21:00.003-04:00

An email Jeff sent out to the MXenergy team for Memorial Day 2009:

Friends and Colleagues,

I wonder if you would take a moment with me to remember the reason we enjoyed a welcome three day weekend.

It would be enough if we were taking a breather after a long and arduous year. It would be enough if we were commemorating the traditional start of summer, with barbecues and picnics and gatherings with friends and family.

It would be enough if we were simply to be taking time for ourselves, a rare treat in today's Type A culture.

But there is more. 141 years ago President Andrew Johnson declared the last Monday in May as a day of remembrance for those soldiers who fought in the American Civil War to preserve the Union.

Referring to the slain soldiers, the President said: "Let us, then, at the time appointed, gather around their sacred remains, and garland the passionless mounds above them with choices flowers of springtime. Let us raise above them the dear old flag they saved."

The commemoration was later expanded to cover all soldiers in all the country's conflicts. But its origins in the Civil War should not be forgotten. For the Civil War was fought and won over universal principals of deep significance to all nationalities: freedom from slavery and bondage, freedom to work and pursue one's dreams, freedom to enjoy the privileges that are the birthright of all men and women.

When Leo Tolstoy, the great Russian writer, was travelling in the Northern Caucasus in 1908, he was the guest of a local tribal chief. His host asked Tolstoy to tell stories about famous men in history. Tolstoy obliged, talking about Alexander the Great, Julius Caesar, Frederick the Great and Napoleon.

When he finished the chief said to him: "But you have not told us a syllable about the greatest general and greatest ruler of the world.... His name was Lincoln."

As Tolstoy put it, Washington was a typical American and Napoleon a typical Frenchman but Lincoln "was a humanitariam as broad as the world. He was bigger than his country." Lincoln was a symbol and the United States an ideal that all peoples, everywhere, could appreciate.

Today we remember those who, like Lincoln, fought for liberty in every age and in every way.

MXenergy is a remarkable family. We represent many nationalities, political leanings, and feelings about the necessity of war. Nevertheless, I ask us all to pause a moment to honor those nameless dead.

They are mostly young. They have often been forgotten by all but their loved ones. But they are all our heroes: Men and women who lost their lives so that we might enjoy a peaceful weekend.

The Day After

2009-04-20T16:41:00.002-04:00

Today is April 23. The day after Earth Day. The Day after the speeches. The school assemblies. The neighborhood cleanups. The television specials.

On Earth Day Americans rally around a shared purpose and vision.

But today is the Day after Earth Day. What now?

Toss a plastic water bottle in the trash – or in the recycling bin? Let the faucet run – or turn it off while we’re brushing our teeth? Let the lamp light up an empty room – or flick the light switch as we leave? Count down the remaining 364 days until the next Earth Day, when we renew our devotion to the environment?

Call me cynical, but is that what Earth Day is about? Is it a day designed to ease our guilt after a year of environmental abuse? Is it like drinking five cups of decaf or Diet Cola with a Big Mac? In other words, is it self-deception that makes us feel good but really does nothing?

Perhaps, it’s the word “Day” in Earth Day that does us a disservice. Perhaps, people feel “off the hook” for the remaining days of the year.

So how can we do more than just talk? How can corporations, including energy companies like ours, act responsibly and make a real impact on the environment? How can individuals and companies, alike, make Earth Day a year-round commitment?

I start with the idea that we are all entitled to heat our homes, turn on our computers and commute to work. Realistically we are stuck with carbon-based energy for the time being, and must continue to inflict some damage both our health and the environment.

But, we can try to control our collective addiction and take the right steps to minimize that damage – every day.

Believe it or not, it is more costly for us to supply more energy than less. Just as utilities are at risk when demand increases and they must build bigger and more costly power plants, unlimited consumption puts us at greater risk of finding economic supplies to meet our customers’ needs. Conservation both reduces our customers’ bills and increases our bottom line. It’s a good idea all around.

Companies like ours also help consumers offset the harmful effects of energy consumption -- the carbon dioxide emissions that have affected global warming, and seem to be everyone’s Earth Day target. These carbon offsets help fund reforestation projects that help to absorb carbon dioxide in the earth’s atmosphere.

In fact, we have bought carbon credits to offset our own company’s carbon usage. This is good corporate citizenship. It also makes our team feel like we practice what we preach – every day.

Businesses should also explore ways to bring the benefits of new energy efficient technologies to consumers. These include insulation, Energy Star appliances, rooftop solar, wind and geothermal energy. Probably the easiest and surest way of reducing energy consumption is real-time metering that sends customers price signals of the true cost of energy. Studies have shown that when consumers know what they are using and how much it costs in real time, consumption drops some 20%.

We want our consumers to become conservers – conservers of energy and the environment.

I can hear critics say that these are Band Aids, like a filter at the end of a cigarette. I agree with them. But until we wean ourselves off the stuff, let’s control the addiction. Call it an energy nicotine patch. Until the day some bright young college dropout comes up with cold fusion in his garage, we will do our part to control the addiction.

In the meantime, when you plug Earth Day into your computer calendar, make it a “recurring” event – one that lasts every single day of the year.

Conversations with a Customer

2009-03-13T09:51:00.006-04:00

I started my day this morning with an email from one of our customers. I enjoy hearing from customers, but this was no love letter.

This customer in Georgia was upset with her energy bill this month. Prices have dropped sharply and she wanted to know why we could not lower her price. She was upset that she had locked into a long term contract last year.

“I called several times asking why my bills were so high and then found that the current rate for new customers with MXenergy was $0.9490 a therm. This is absolutely terrible.”

I can understand her frustration. I have been disappointed with my own heating oil provider since I locked in rates last spring at twice today’s market price. I have also paid thousands more for my fixed rate mortgage in recent years than I would have if I had chosen a variable rate mortgage.

I wrote the following to our customer:

“Energy volatility is, as you may know, the highest in the world, far greater than the stock market or interest rates. Over the past year energy prices have dropped more sharply than the stock market. In prior years, they also climbed more sharply than the stock market, some five-fold between 2002 and 2007!

“For over ten years we have protected customers from higher prices, never walking away from a single customer irrespective of volatility. To do so, we have put our capital on the line, buying energy supplies far into the future and committing our own capital up to three years before we have been paid by our customers. As a result, we are proud of the fact that we have saved numerous customers from energy spikes that could bust their budgets and in the case of small businesses force them to close shop or lay off workers.”

I explained that in recent months energy prices have fallen sharply. Because we have already contracted for energy supply at higher prices we cannot willy-nilly drop our prices. But we do our best. We review customers on a case-by-case basis and sometimes can offer a small price reduction.

I continued:

“I regret that we are unable to control world energy prices. I also regret that once we lock in our forward prices with our suppliers we are unable to walk away and pass the savings on to you. At the same time, I am extremely proud of the price protection we have provided our customers as well as the extremely fair early termination option we offer customers, at a cost far less than we incur when customers leave.

“Sadly, our loyal customers end up paying more to cover these additional costs. But as long as most of our customers appreciate the price protection we provide the added costs are minimized.”

My suggestion to today’s consumer? Take advantage of fixed-rate plans NOW, while prices are still low.

Does that make a current customer, who may be paying higher energy prices today, any happier? Probably not. But, the bottom line is that we are in the customer service business. If customers are still unhappy with our products and services, we offer an option to opt out. We allow our customers to end their contracts if they pay an early termination fee, which is minimal compared to other termination fees such as cell phones contracts.

Later in the morning I received another note from our customer.

“Thank you for your reply. I have to admit I was not quite sure if you (or anyone for that matter) would respond. It is a bit refreshing.

“We will probably have an ‘agree to disagree’ in the end of this dialog but that is OK.”

I would like to do more than disagree. The core mission of MXenergy is -- and has always been -- to help both families and businesses control their energy bills. I am quite satisfied that we are doing the right thing by our customers. We will continue to provide price protection and we will continue to look for better ways to deal with the costs – and frustrations – of energy volatility.

The Customer is Always Right. Except...

2009-03-02T15:19:00.004-05:00

Businesses generally go out of their way to help customers, particularly in tough times like this. I have blogged frequently about customer service standards and the importance of the customer Golden Rule.

Yes! The customer is always right.

Except when he or she is wrong.

The consumer that ran up credit card bills and now declares personal bankruptcy and expects the stores to walk away is wrong. We may be sympathetic. But he's wrong. We all will pay more for our purchases when the stores can't collect this bad debt.

The condo owner that took out a mortgage she can't afford and now expects the banks to lower her monthly payments is wrong. We may feel her pain. But she's wrong. We all will pay more for our homes because of these defaults.

The driver that had a fender bender and makes an inflated insurance claim is wrong. He may think it's no big deal and besides, he's been paying all those premiums for years and never collected before. But it's wrong and drives up the costs to all of us paying premiums.

The homeowners that locked in their heating oil price to protect themselves from higher prices and now stop paying their bills or walk away from their contract because prices are lower are wrong. If prices had gone up they would have expected the supplier to keep its commitment. But because prices came down they should have a free ride? Leave the merchant holding the bag for higher priced fuel bought on their behalf? And drive up prices for everybody else?

The student that takes out loans to pay for college and stops paying them is wrong. And then complains the debt can't be discharged in bankruptcy. We empathize with the stress the young graduate feels. But a contract is a contract. You take. And you give back.

The shopper that buys the dress off the rack, wears it to the party, and then returns it is wrong. We may laugh at the gall, take secret pleasure in her beating the system. But she hurt the shopkeeper and drove up costs for others.

I'm willing to take responsibility for mistakes we've made in our business. We admit our mistakes, make up for them and move on.

Most of our customers honor their commitments. But many do not.

When a customer calls us on a mistake they want to see us make it right. Likewise, when we enter into a contract with a customer we expect them to honor it.

Make no mistake: Good customers pay for bad customers. Mortgage rates, credit card rates, insurance premiums, clothing prices, energy supply are all more expensive because of bad debt, broken contracts, and inflated claims.

If you think I'm unreasonable - and wrong - let me hear from you. After all, you're probably right. Except...

It's Confidence, Stupid!

2009-02-24T15:05:00.004-05:00

The French have a saying: “Plus ca change, plus c’est la meme chose.” The more things change, the more they stay the same. Or as some might have it these days: “The more things change, the more they get worse!”

No doubt, there’s a lot of angst out there. I hear a lot of people saying things like, “At least we have our health!” That’s when you know things are really bad. What they really mean to say is, “I’m feeling really crappy about the world and I’m going to try to make myself feel better, starting with this little mind game I’m going to play…”

At MXenergy University – our in-house continuing education program – we have been having monthly “current events” sessions. So far we’ve managed to deconstruct the Bernie Madoff scandal, the President’s bailout proposal, the imminent nationalization of the big American banks and the potential for revolution in China. It seems that everybody is asking themselves the same, largely unanswerable questions: How did we get ourselves into this mess? Who is responsible? Where are we going from here? Are there any signs of good news? How long will this go on?

Along with the unanswerable questions are some seemingly incontestable principles. For example:

1. Never underestimate the ability of human beings to lie to themselves until they believe it.

I owe this adage to a dear friend in Omaha who is a student of markets. By markets I mean anywhere people go to buy and sell at negotiated prices. Ordinarily we think of the stock market; the futures market; eBay. But we also have the local farmer’s market; the antique store in the country; the souvenir stand by the Great Wall.

One of the most notorious markets is the real estate market. Some people would say that real estate is the source of all of our current economic woes. But it is more accurate to say that the real estate market is where many people got into trouble because they took on too much debt. Many real estate investors believed that houses could only go in one direction. That is, up. Not.

Now, it would be easy to blame this naive view on unsophisticated players. Surely professionals know better. They would not make the same mistake that the ordinary mortal would make when buying a home. They would understand that markets can go up and down. That some markets can be very volatile and go up and down a lot. That if you borrow a lot of money to invest and the market goes down instead of up you can end up owing a lot more money in a hurry.

Unfortunately, it was not only the naive man and woman on the Street who believed their own PR. It was the professional as well. You would think they would have learned the hoary lessons that excess leverage can lead to disaster. Think Dutch Tulips, South Sea Bubble, Panic of 1907, Stock Market Crash of 1929, Hunt Brothers Silver Market, Long Term Capital Bank, Dot Com Bubble. Yet when the market is moving up, who wants to be a skunk at the picnic, a Chicken Little crying “The sky is falling, the sky is falling!” How much easier is it to persuade ourselves that somehow this market is different.

2. Nobody can see the bottom until they bounce.

I wish I had a nickel for every talking head that has “seen the bottom” over the past few months. The only guy who saw the bottom recently was Chesley B. Sullenberger, the pilot of US Airways Flight 1549 that landed in the Hudson River. And he was lucky. The rest of us will just have to wait until we land, open up the emergency door and walk out on the wing.

There is an old saying in the commodity markets that the market does not bottom out until the last guy starts selling. When every last trader has given up hope, the market will be ready to rally. Of course, that never happens. But in many apocryphal stories there is a grain of truth. You know how forests work: periodically they burn and new growth seeds itself in the charred remains of the old forest. That is essentially what happens with markets. And it is what appears to be happening with our entire global economy. We are experiencing a raging economic fire that is consuming the undergrowth of inefficient, bloated, over-leveraged businesses. In their place will rise stronger, more resilient and tougher organizations.

Until we make the same mistakes again, of course.

3. It’s confidence, stupid.

We used to think it was all about the economy. It turns out the economy is simply the first derivative of something far more important: Confidence.

Roosevelt was right in his first inaugural address: “We have nothing to fear but fear itself.” Fear is what put the Japanese economy into a two-decade funk that it has yet to crawl out of. Fear is what held the world economies back in the 30s. Fear is what is now keeping us home, cutting back our budgets, cutting up our credit cards.

The stimulus package is designed to get money into people’s pockets. But it will fail if people don’t start spending. If people are worried about where the next paycheck will come from they will not spend. They will save. And if they save, prices come down. Income goes down. Fear will grow. And people will save more.

Where people save is another worry. Everybody talks about how deflation has hurt Japan and how that is a great risk in the world’s developed economies today. True enough. But think about it: if people saved by putting their money in the bank, and the bank lent the money to others, it wouldn’t be so bad, would it? Savings would help fuel regeneration. New businesses could find credit. More people would be put to work.

No, the worry is that people do not put their money in the bank. They put it in their mattress. They keep it in cash. Or gold. That is why gold just crossed $1000 an ounce. That is why, despite a decade of deflation and a culture of frugality, the Japanese are saving less! My theory is that the statistics that show lower savings are reflecting savings in the bank, the savings that you can count, the savings that people report. The money in peoples’ mattresses is not showing up in the official statistics. It is not getting reported. And it is not getting invested. It is not fueling regeneration. It is fueling fear.

We are at risk of going from a society that saved too little to a society that saves too much! Remember Rudolph Giuliani after 9/11 scared the bejesus out of New York City? Get out and spend, he said. Don’t let the terrorists win. Live!

Today more than ever we need that confidence. And we need it soon.

4. Raise my taxes. Please!

I favor the current stimulus package because I think it’s a nice balance between tax cuts (about 1/3 of the bill) and spending (although I could quibble with some of the uses.) But while I favor tax cuts for people in lower economic brackets and for businesses that put people to work, I do not favor tax cuts on people in higher brackets.

We have to stop thinking of taxes as an unadulterated evil. Yet we have put ourselves into that state of mind through decades of political pandering by feckless leaders who try perennially to buy our votes with money. We forget the principle that Oliver Wendell Holmes, Jr. is said to have expressed: “Taxes are the price we pay for civilization.” (Actually, Justice Felix Frankfurter reported that Holmes’ secretary said something like, “Don’t you hate to pay taxes?” and Holmes replied, “No, young fellow, I like paying taxes, with them I buy civilization.”)

Imagine if you lived in a utopian paradise where every need, every whim, every fantasy was satisfied. The price? 100% tax. Would you accept it? Of course.

Now imagine a different kind of utopia in which you were assured that you would keep 100% of your income. No taxation. Not a dime. The price? No services. No paved roads. No public education. No snow removal. No public hospitals. No social security. No air traffic control. No regulation of drugs; food; safety. No military defense. No local police. No fire fighters.

You choose.

Is it too much to ask for honest leaders who make the case for a civilized level of service at a reasonable cost? In wartime we accept sacrifice. Why can’t we accept it in peacetime?

5. We are our brother’s keeper.

So what do we do? That is the question everybody wants answered. The only answer I can summon is that we change the way we view the world. We have lived in a world where we were takers. Where we believed our own PR that things would continue to get better. That a rising tide would lift all boats, and a rising market would bring prosperity to all.

Now we must learn to be givers. Starting with our loved ones. Extending to our friends and reaching out to the stranger. Extended unemployment benefits, for example, are an example of how we as a society have chosen to care for the stranger among us when that stranger is in need. Restructuring (not extinguishing, mind you) debt, so that people who owe money have a chance to pay it back over time, the same way a company like ours gives people extended payment terms when they run into trouble.

I’d like to hear your answer.

Smell the Roses

2008-12-16T15:21:00.003-05:00

You would think people who travel a lot would be curious about the world around them. Maybe if they are on vacation and leave their laptops behind and let their cell phone batteries run down. But business travel is different.

One airport is like another. One cab or shuttle is like the next. Sure there are moments on the road when one suddenly notices something novel – Lucky Lindy’s Spirit of St. Louis hanging from the rafters at Lambert Field in St. Louis, say, or the light show that greets you in the lobby of the W hotel in Atlanta. Those are exceptions, however. For the most part I catch myself walking through baggage claim and asking, “Where am I?” I’ve been known to get into cabs with my head buried in my Blackberry when the cab driver turns and asks, “Where to?” and I respond, “I have no clue.”

Sometimes I’ve rented so many cars in a week I can’t find the car in a parking garage to save my life. I once rented a car in Louisville, parked it at a hotel, got a lift to the airport, and forgot about it. A month later I got a call during a dinner party:

“Mr. Mayer, do you have our car?”

“What car?”

“The car you rented from us five weeks ago at Louisville airport.”

“Louisville, I don’t remember being in Louisville.” A pause. “Uh-oh.”

That one cost a pretty penny. I expensed a day and ate the rest. National was nice to charge me only for a month. After all, I hadn’t put a lot of wear and tear on the car!

Recently I arrived in Hartsfield-Jackson Airport in Atlanta. It’s one of those enormous new airports, similar to the ones in Denver or Pittsburgh, where it takes longer to go from Terminal A to D than it does to fly from New York to Rome. You wear out a pair of shoes walking between gates. The one compensation is that these mega-terminals are now like shopping malls. One can actually spend a pleasant couple of hours browsing through the book stores, sipping a cup of coffee, or doing some window shopping. A friend of mine recently asked why somebody doesn’t offer spa services and manicures, for travelers with time on their hands. I forgot to tell her that the last time I flew through Houston I found somebody has done just that.

Back to Atlanta. Another mile-long hike past the national brand name stores. A ride on an escalator past posters of Tiger Woods advertising for Accenture. A ride on the inter-terminal monorail with no conductor and a mellifluous voice repeating over and over: “Approaching Terminal B – B as in ‘Boy’.” Nothing new here.

I arrive at the baggage terminal. I emerge from the homogeneous monorail. I head to the usual escalator. I pass the usual posters.

Then I look up. The escalator is as steep as Mt. Everest, maybe steeper. Fortunately it’s moving. But evidently not fast enough. Somebody brushes alongside me. He’s a young man in a light green camouflage uniform. He is running up the steep stairs. A backpack is bouncing on his back. He holds a small shopping bag in front of him. He’s taking the steps two at a time. Now he takes them three at a time. I get winded just watching him. He climbs and climbs and then he disappears at the top, as if into a cloud.

I start to climb the moving escalator myself. I take the steps slowly at first. Then I quicken my pace. Then I take two at a time. I want to see where the soldier is going. I want to see who he is greeting.

I get to the top of the stairs and emerge into the terminal. In front of me I see the soldier’s back. He is bent over. His backpack is still now. His shopping bag is on the ground. There are two sets of arms around him, holding him. They are frozen. I stand there for a minute, and they stand there, too. There is an older woman and a young woman. And they are holding their soldier and not letting him go.

Behind them is a long sign. It reads: “Welcome to Atlanta.” Five people are holding it up and they wear caps and shirts that read USO. They are smiling. More soldiers in camouflage are coming to the top of the escalator and emerging into the terminal. They are greeted by cheerful cries of “Welcome.” Behind the sign is a long table with volunteers. Atlanta is one of the two major embarkation points for US soldiers returning from the Mideast.

A man in civilian clothes walks past my soldier. As he does so he turns back. “Thank you,” he says, and moves on.

I have been in many airports. After a while I stopped seeing the families saying goodbye. The mothers and fathers flying back after visiting the new grandkids. The college students heading off to a junior year abroad. The husbands and wives going off to take care of the aging parents. At baggage claim I stopped noticing the reunions. The embraces. The tears of happiness.

But I will never forget my soldier. He took the escalator as if it were an enemy bunker on a hilltop. And he won it: for family, for country and for me.

Trees for Tots

2008-12-11T14:51:00.007-05:00

Nobody likes a braggart. We like our winners to be modest, a little less like Mark Spitz and more like Michael Phelps.

Consider the Academy Awards. It’s not the dreadful clips of movies that I didn’t see and never will but rather the acceptance speeches that get my attention. The recipients walk to the podium, trying to pretend that 30 million people are not watching. Strange that in an industry that is completely scripted, one doesn’t know until the recipients get to the microphone what is going to come out of their mouths. Will it be a modest clogged-throat first timer holding his or her Oscar like a newborn baby? Or a pompous fist-pumping producer that waves the Oscar around like a cell phone. Those last guys really get my goat. I secretly hope they’ll trip over their shoelaces when they leave the podium.

Here at MXenergy we occasionally get an award. But we rarely talk about it. We’ve been on Inc. Magazine’s list of fastest growing companies and somebody sent us a copy of Entrepreneur Magazine’s list. Both of those ended up buried on a shelf of books. Recognition is nice to receive but frankly it scares me. It wasn’t long ago that you could pick up a copy of Forbes or Fortune and pretty well bet the guy on the cover was going to do the perp walk within a year or two. Enron’s Ken Lay, for example, or Tyco’s Dennis Koslowski (he of the $6,000 shower curtain).

No, stay out of the limelight is my philosophy. Keep your head down, do a good job, and people will hear about you by word of mouth. Stick your head up and blow your horn and you may as well have a sign on your back saying “Kick me.”

With that preface, I confess a little pride at a little honor that recently came our way: The Connecticut Quality Improvement Partnership award. Few people know about the award and we didn’t lobby for it. When we received notice it was in an email, but we couldn’t figure out what the email was for because the sender had forgotten the attachment. We received two awards. One was for our “Earth Friendly/Project Green Gift” program. We introduced this last year to help homeowners and businesses offset the harmful effects of carbon dioxide emissions. We’re all responsible for the quality of the air we breathe, but sometimes we wait for the other guy to do something. Something like stop driving, or throwing the computer out the window, or cooking over the fireplace. It sounds good to be green but it’s easier to let others take responsibility.

The other award was for our “Fixed Price Protection” program that enables residents to navigate a complicated energy market and insulate themselves from volatile energy prices.

The two silver-level Innovation Prizes were granted by the Connecticut Quality Improvement Award Partnership, a non-profit partnership among the private sector and The State of Connecticut, which is America’s oldest state-level quality award. For 13 years they have used the Malcolm Baldrige National Quality Award Criteria for Performance Excellence.

According to Sheila Carmine, executive director of Connecticut Quality Improvement Award Partnership, the ingenuity of Connecticut’s innovations is more intense each year. Evidently, Connecticut continues to prove it is an innovative state that not only has entrepreneurs that come up with innovative ideas but who also pursue them until they reach their marketplaces.

MXenergy’s Fixed Price Protection program is pretty conventional; several marketers have offered something similar over the past ten years, although MXenergy is pretty unique in offering terms as long as three years. The Earth Friendly Partner/Project Green Gift is almost unique, however. A CO2 customer-friendly offset program for home and business is MXenergy’s principal answer to global warming. We introduced the first such program in North America to help energy consumers purchase carbon dioxide offsets. Since then we have purchased 100,000 tons of CO2 offsets. Through our traditional marketing programs, as well as Project GreenGift , MXenergy has enrolled some 25,000 customers in the program since November 2006.

MXenergy was recognized among 60 other Connecticut-based companies whose programs were judged on their ability to solve problems through innovation. All CQIA Innovation Prizes were ranked by twelve Baldrige-trained CQIA examiners. The awards were handed out November 7 at Water’s Edge Resort in Westbrook, Connecticut.

I think it was Civil War Union General William Sherman who said of the Presidency, “If nominated I will not run, if elected I will not serve.” We probably would say the same thing about our business. Nevertheless, I’ll admit that – particularly in the midst of the current financial crisis in our country - it is nice to be recognized, especially when we didn’t seek the limelight.

Candidates Show Energy … Are They Showing Us an Energy Plan?

2008-10-02T12:24:00.002-04:00

Both John McCain and Barack Obama have a lot of energy. And they like to talk about energy policy. But what I’d like to see is some more energy spent on energy policy: Not just hot air but real, focused attention on long range solutions and not short term fixes.

Talk about scoring easy points. Most Americans care about energy issues and they are desperately seeking leadership. We recently polled 1000 adults, some our customers and some not, to learn what they thought about the candidates’ energy platforms. Results: Not pretty.

Here is a sample of what we found:

80 percent of Americans feel the government is responsible for resolving energy issues;
83 percent feel America does not have a clear energy policy;
Only 57 percent believe that either candidate has an effective energy policy;

Only 26 percent are confident that either candidate can help fix our nation’s energy problems.

Imagine that: Americans are split on almost everything, but they are united in this: There is a vacuum of leadership on energy.

Neither party has a monopoly on wisdom. The survey shows that only 29 percent of Democrats are confident in either of the candidates’ energy policies, while 24 percent of Republicans have a similar view. Only 20 percent of those identified as Independents have confidence in the candidates’ energy plans.

In the meantime, 84 percent of Republicans, 83 percent of Democrats and 83 percent of Independents said that America had no clear energy policy.

Is government the answer? Or should we leave it to private enterprise. Most Americans believe it is the government’s responsibility to help Americans deal with the energy issues: 88 percent of Democrats agree that the government needs to play a role, compared to 73 percent of Republicans and 78 percent of Independents.

I tend to agree that government must play a role. After all, government exists for a reason. To protect the defenseless, to advance the public welfare, to make investments that are greater than any mortal can make alone (with the exception of Warren Buffett and Bill Gates, perhaps). If left to the marketplace, the wealthiest communities would have lots of electricity and the poorest would be heating their homes with coal stoves. Free enterprise is great in theory but needs to be tempered sometimes by regulation.

We’ve heard lots of talk about solutions: Everything from “drill, baby, drill” to pump up our tires. Politicians seem to think that the way to show leadership is to promise lower energy prices the way they promise lower taxes. The survey underscores that Americans are not fooled by easy fixes. They know that we live in a world of energy shortage and that price volatility will not go away overnight.

Let’s treat our nation’s energy addiction with the same seriousness as we treat substance abuse. Some solutions may be more painful than others. At the risk of rubbing somebody the wrong way, here are a few ideas:

Provide tax credits for on- and off-shore natural gas exploration. We are undermining our national security interests and bankrupting our economy by sending billions of dollars abroad for crude oil and natural gas exploration, production and distribution. Let’s do everything we can to keep the funds at home.

Tax carbon consumption or adopt cap and trade. Cheap prices, not high prices, are the cause of most of our energy woes.
Extend and expand tax credits and deductions for energy efficiency: spray foam insulation would reduce many homeowners’ consumption by up to 30% within a year. Solar panels are almost cost-effective and consumers need to start to install them now.
Simplify permitting for new transmissions lines and for wind and solar development. NIMBY (not–in-my-backyard) concerns will always slow down change but the public interest demands that local, partisan concerns be preempted by the greater good.
Expedite nuclear power plant licensing and development. France generates over 75% of its electricity from nuclear power and has escaped many of the risks posed by Russian natural gas supply and OPEC crude oil pricing.
Permit offshore exploration and drilling, subject to prudent steps to protect our fragile ecosystems like coastal beaches.
Permit drilling in the tiny area of the Arctic Wildlife Refuge and grant rights-of-way for transportation to the Lower 48.
Provide investment tax credits and tax deferrals for new energy technologies. I do not think government try to choose which technologies will work; most new breakthroughs come out of basement and garage laboratories, not government-sponsored programs. But new business ventures should not be strangled in the crib by burdensome regulation and tax policy.
Fund an international institute of applied energy science and technology. Among other things, the institute could help ensure that new technologies receive patent protection but also that licensing is prudent and cost-effective. We are at risk because of our dependence upon oil. Europe is at risk because of its dependence upon Russian natural gas. The world’s climate is at risk because of nitrous oxide emissions. We need to accelerate the dissemination of scientific research and technological developments.

My prescription is sure to offend a lot of people. But it will also provide widespread benefits. We need to compromise and give a little or we will never get the policy we need. It may be the very definition of a good deal: equally good and equally bad for everybody.

The Corner of Wall Street and Main Street

2008-10-01T09:07:00.002-04:00

The air waves and newspapers are filled with stories of Wall Street and Main Street. The economy certainly demands our close attention. But there is another, potentially more important story that you probably will not see or hear. It is a story about the corner where Wall and Main Streets meet, where American ingenuity was met by American risk capital and changed our lives forever.

One hundred years ago today, the first Model T rolled off the assembly line of the Ford Motor Company’s factory on Piquette Avenue in Detroit. The “Tin Lizzie” was a four cylinder, 20 horse-power vehicle. Its low cost of $825 made driving affordable for average families. The car’s simple, standardized design made rapid manufacture feasible: “Customers can have whatever color they choose,” Henry Ford said, “as long as it’s black.” By 1924 ten million Model T’s had been shipped. By 1927, when production stopped, fifteen million had been sold.

Like so many success stories, it took Henry Ford some fifteen years before the Model T became an overnight sensation. It is worth pausing to reflect on the primary ingredients of Ford’s success and what they teach us about modern business. Given my interest in our young retail energy industry, it is ironic that Ford came out of the utility business. His first big job was as an engineer for Detroit Edison, the Michigan utility. Indeed, he met Thomas Edison when he was tinkering in his garage with one of his first experimental cars. “Young man, you have the right idea,” Edison said to him. “Keep right at it.”

Ford first saw a coal-fired steam engine-driven tractor when he was 12. At 16 he joined the utility and worked with turbines generating electricity. At 28 he sketched his first internal combustion engine on the back of a sheet of music and at 30 he started his first engine in the kitchen sink. Working in his garage he assembled his first prototype and at 2 a.m. on June 4, 1896, he emerged onto the streets of Detroit driving his first car.

Ford did not invent the gasoline powered engine or create the first car. Karl Benz in Germany and the Dureyea brothers in the United States took those prizes. For years Ford fought off a lawsuit claiming infringement of a patent for a gasoline engine granted to a Rochester lawyer in 1879. He finally won that lawsuit in 1911 when the Court of Appeals in New York observed that the lawyer’s patent only extended to his specific design. The decision unshackled Ford, and all inventors since: Innovation is a continuous process of modification and improvement. It would be unfair if we let the caveman who invented the stone wheel get a piece of every tire manufactured since!

No, what Ford did was take the basic ingredients – engine, wheels, axels, transmission – and assemble them in an inexpensive, efficient manner. He did not create mass production or the assembly line. But there, too, he took the manufacturing techniques of others and improved on them. One of his favorite sayings is an article of faith at MXenergy: “Everything can always be done better than it is being done,” he said. He also gave credit to others for his inspiration. He attributed one of his greatest achievements – the mobile assembling line, in which workers stood in place as the parts came to them -- to watching a carcass being “disassembled” cut by juicy cut at the Chicago Stockyards. He pulled some scrap metal out of the wreckage of a French race car and discovered vanadium, a tough but light-weight steel alloy that he would incorporate in his Tin Lizzie.

He also was willing to break the mold. When he saw turnover in his ranks – in 1913 he needed to hire and train 963 workers for every 100 he retained – he raised wages from $2.38 for a nine-hour day to $5 for an eight hour day. Other employers were stunned but Ford maintained that a healthy workforce was good business. Indeed, now his employees could even afford the cars they were manufacturing! And when other auto makers were looking to fatten their profits Ford lowered the price of his car, to as low as $99 in 1914. Lo and behold, sales increased and profits improved. The very conception of the Model T was revolutionary, putting the automobile within the reach of the common man and not only an exclusive perquisite of the wealthy.

It was not always smooth sailing. Ford quit his job at the Edison Illuminating Company, the predecessor of today’s Detroit Edison. But his first venture as the head of the Detroit Automobile Company did not fare well. The company went into receivership (it later emerged as the Cadillac Motor Car Company) and Ford was out of a job. Fortunately Ford also had an interest in car racing and the avocation helped bring him his first important seed capital. After beating an Ohio car manufacturer in a ten-mile race in 1901, he attracted the attention of a wealthy investor who backed him to start the company that would bear his name. Fortunately for Ford his backer decided to start another company, lost his shirt, and was forced to sell his shares to Ford and others. The economic panic of 1907 helped Ford refocus his energies on the mass market; the recession made him realize that making cars for the wealthy few was a ticket to the poorhouse.

Henry Ford was not a Saint, don’t get me wrong. He was imperious and controlling. When his workers came up with a new design intended to hold off competition from new market entrants like Chrysler, Ford allegedly broke the windshield and stomped on the hood. It took him years to give up on his Model T. His politics were nasty, inclined to anti-Semitic rants about international conspiracies.

But Ford’s legacy remains the Model T: As creative as its standardized design; as tough as the vanadium of its hull; as commanding as the backfiring of its engine. Without the Model T we might all be like the French sans-culottes, standing in the dusty streets watching the aristocracy pass in their shiny Cadillacs. When you turn the key this evening think of Henry Ford cranking up the Tin Lizzie on Piquette Avenue in Detroit and stop for a moment to think about the corner of Wall Street and Main Street.

A Leadership of Frankness

2008-09-27T15:24:00.007-04:00

The headlines these days are literally shouting:

“U.S. STOCKS SUFFER ON FEARS FOR ECONOMY”

“FIGHT FOR SURVIVAL ON WALL STREET”

“DAY OF RECKONING ON WALL STREET”

“U.S. SEIZES MORTGAGE GIANTS”

“AIG, LEHMAN SHOCK HITS WORLD MARKETS”

And on the front page of the New York Post, a big red arrow and the number “504” in bold type. The Dow Jones Industrial Average had dropped 504 points in one day, the largest drop since after the markets opened following 9/11 and two points larger than the crash of October 19, 1987 (although less as a percentage of the entire market.)

I part the slats on the Venetian blinds in my office. Summer Street in downtown Stamford is empty. Thank goodness. No bodies on the streets. So far this is not a replay of Black Monday, the day of the big 1929 stock market crash.

But it is serious, make no mistake. Last year there was fear that homeowners may not be able to pay their mortgages. That led to fear that the bonds backed by those mortgage payments might default. As the value of those bonds plummeted, the credit of the companies holding them dropped. Then the people dealing with those companies started to worry and ask for more collateral support. Which brings us to today, when it sounds like the banks themselves are nervous: Nervous that when they loan money to each other it may not be repaid.

As Franklin Roosevelt said in his inaugural address, “We have nothing to fear but fear itself -- nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance.”

I went back to Roosevelt’s address. You can find the entire text of the speech here: http://www.americanrhetoric.com/speeches/fdrfirstinaugural.html . Reading it I was surprised to find that his statement about fear was not in the middle of his address. It was right up front. Roosevelt was elected in the middle of the Great Depression, 1932, and he chose not to sugar coat his message but to use it as a sledge hammer. Here is the way his address began:

“This is a day of national consecration. And I am certain that on this day my fellow Americans expect that on my induction into the Presidency, I will address them with a candor and a decision which the present situation of our people impels.

“This is preeminently the time to speak the truth, the whole truth, frankly and boldly. Nor need we shrink from honestly facing conditions in our country today. This great Nation will endure, as it has endured, will revive and will prosper.

“So, first of all, let me assert my firm belief that the only thing we have to fear is fear itself -- nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance. In every dark hour of our national life, a leadership of frankness and of vigor has met with that understanding and support of the people themselves which is essential to victory. And I am convinced that you will again give that support to leadership in these critical days.” [Emphasis mine.]

Wow. I know that our current economic climate does not approach the terror of the Depression. I also know that we are in the middle of the “silly season” of political posturing, when both parties revel in pandering to applause lines and quoting each other out of context and playing “gotchya” with each other, and when so much of the rhetoric that postures as commentary is babbling palaver.

Still, Roosevelt is on to something when he talks about “a leadership of frankness.” If we don’t acknowledge our challenges, we can’t meet them. We can be ostriches, hoping that things will improve. Or we can be lions, straddling the path and confronting our demons.

I have been relieved to see leadership in our economic policy over the past few weeks. It’s just a shame that it took a crisis for us to make important changes in our financial system. But I sit here wondering: What will it take for us to give the same serious attention to energy policy. We are in a world of energy shortage, with a delicate supply and demand balance that is on the verge of crisis. And yet, unlike the frenetic action we have seen in recent weeks in the financial markets, we see no such sense of urgency in the energy world.

So the next time you hear a politician talk about energy policy, ask them why they aren’t frank with us. Why they don’t acknowledge that we will never have alternative energy if we keep looking for short term fixes instead of long term solutions. Why we need to invest in new energy technologies and make carbon a more costly alternative, not a cheaper one. Why we need to make energy a small fraction of the family and business budget the way it used to be, not the growing cost it is today.

And when the politicians show us that they are willing to provide a “leadership of frankness,” then we will respond with the “support of the people themselves which is essential to victory.”

Just the facts, Ma'am

2008-09-22T12:03:00.004-04:00

One of our Investors, a very smart guy with tons of experience and wisdom, loves to ask questions about the way our business works: How we manage to protect customers from energy price spikes when energy prices are so volatile, how we protect our reputation by making sure that our sales people are honest to customers about the benefits of our products, how we attract the best people to our team and how we promote values of hard work and integrity in our organization. After we talk on the phone he often says just before we hang up: "Good, now I feel like I've accomplished my goal for today, to be smarter than I was yesterday."

The comment is notable for two reasons. First, coming from one of the savviest business people I know it's humble. Here is a guy who has a breadth of understanding and insight into business that I marvel at. Yet he is willing to acknowledge readily the gaps in his knowledge. Sometimes I wonder whether he's really making me feel good, fulfilling the adage that I once heard about management, "The good leaders are the ones who are not eager to show you how smart they are but the ones that show you how smart you are."

But I also think he's often being sincere. He is eager to learn and gets constant satisfaction from doing so. He gets excited the way a kid might when shown a new card game or an adult when they learn of a new short cut to the grocery. "I can't believe I didn't know that," we'll say. "How could we have lived so long ...?"

My friend's observation says something else about people, a point worth making about business in general. We are all hungry to learn and understand how things work. We learn with experience that things are often not as simple as they may at first appear. And given the choice between having a superficial understanding of something and learning the detail about how something works most of us will welcome the detail. (Possible exception: when it comes to taxes I would prefer to hear the bottom line and not understand how the accountant got there!). What makes my friend special is that he acknowledges his ignorance and is not afraid to ask whereas most of us will take pleasure in new knowledge but don't go out to get it.

I was reminded of this recently when I spoke to a group of 300 or so of our sales representatives in Georgia. I was talking about energy markets and why prices are so volatile and why customers are eager to protect themselves from higher prices. One of our agents had brought a friend who works for another company. She told me later that he was reluctant to come because "he had heard it all before." Midway through my talk, she said, her friend turned to her. "You know," he said, "When I went to other sales meetings, all I heard was 'Sell, sell, sell.' Here I'm getting an education."

I don't know if our competitor's sales agent will join us. I hope he does. But he reminded me of my friend's comment. So many American companies talk down to their customers and to their employees as well. They treat people as stupid and naive.

Wouldn't it be nice if companies trusted us to know the truth. If they gave us straight answers to our questions. If they told us the good and the bad about their products instead of ignoring the stuff that we'll learn about anyway as time goes on.

In our business most companies promise customers they will save money. That is like a bank telling homeowners that they will save money on their mortgages if they lock in an interest rate. Hello? How does the energy company know, any more than the banker, that energy prices are going up? Do they have a crystal ball? Do they know that there is a hurricane blowing through the Gulf of Mexico or a war about to break out in the Mideast?

Of course not. These promises are hollow and phony. Imagine if the potato chip bag said something like: Bigger package, no more inside! Or if the corner gasoline station said: $3.91/gallon!

I am grateful for that comment in Atlanta. It made me smarter than I was the day before. A good day.

Observations After Ike

2008-09-16T16:22:00.001-04:00

Last week someone had mentioned to me that the true test of a company was whether people wanted to do all they could to support it or, whether they felt they needed to be protected from it.

As I watch our team members struggling to get to the office in Houston and carry on as if their hometown had not been devastated by a monstrous storm and I watch them working from home while their families are still scattered and some of their homes and yards are a shambles - I think one thing is clear.

We are blessed with a team that is dedicated to our business, our customers, and most remarkably to each other.

It is a humbling experience. An army is only as strong as its weakest soldier, as its lowest ranking recruit in the mess hall. I think we pass the test!

Reflections on 9/11

2008-09-11T14:08:00.004-04:00

Thursday is the anniversary of September 11, 2001. On that day almost 3000 of our fellow citizens lost their lives in a sudden and unexpected act of terror.

In some ways time has left us numb to the profound feelings of horror and loss we felt that day. We humans have an amazing ability to bounce back from tragedy. We mourn and then we go about our business with new vigor. But we also remember, and in remembering we honor the good and innocent people we lost that sunny Tuesday morning seven years ago.

We all remember where we were that morning when we heard the news.

The whole world remembers. I was on a business trip to Ohio that day. The night before I had addressed the town council of Aurora Falls, a suburb of Cleveland. Aurora Falls had just agreed to purchase gas from MXenergy on behalf of its citizens. I was going into a meeting that morning with the town's consultants when I heard a radio report about the first plane. Anybody who lives in New York City thinks about planes crashing into tall buildings all the time; after all, it happened in the 30s when a small plane crashed into the Empire State Building in the fog. This was different.

Our meeting started at 9. I suspected this was not an accident and had trouble concentrating. I asked if we could recess so I could check the news.

I found a television in the lobby and turned it on to pictures of a strange sight: Smoke and only one tower which was also smoking. As I asked out loud where the other tower was the announcer said the unthinkable. Moments later the second tower fell as well. There was silence in the room as each of us heard our own inner voices in silent prayer.

Like many of us I knew people in those buildings. I had been in them the week before. In one was an energy futures broker who taught me so much about trading and managing risk. Hardly a day goes by that I don't remember something he told me. In the other building were bankers and government workers. Many people I met in the next few weeks had miraculously escaped. Many others had not.

As I drove home from Cleveland that day I stopped at truck stops along the way. Outside small towns in central Pennsylvania I found people from all walks of life gathered in front of televisions, watching the unfolding news in silence. Out of a shared sense of loss there seemed to be a sense of cameraderie and friendship, of people supporting each other in their grief, helping each other cope. In the coming days there would also be a tangible feeling of common purpose, of unity in the face of adversity, of pride in the courage and sacrifices shown by the firefighters and by many of the victims themselves. Most of all there would be, for a few months at least, an international sense of solidarity and affection for those who had suffered, for our shattered era of peace, and for the great city itself that had lost forever two of its landmark buildings.

You may not know it but that morning we at MXenergy immediately suspended marketing and did not resume until several days later. In the meantime we asked our hardworking folks in Customer Care to spend time with their customers, letting them talk about their feelings and reactions to the events. Everybody felt the need for a helping hand in those days and we wanted to do our part.

Today, MXenergy observed a moment of silence at 8:46 EST to commemorate the events of that morning and the meaning that September 11 has come to symbolize. We are a busy company but not too busy to pause, reflect, and remember our common humanity.

Coast or Lunge - You Decide

2008-08-25T17:07:00.006-04:00

There is a wonderful scene in Legally Blonde 2 when Elle Woods, played by Reese Witherspoon, begins an address to a joint session of congress with the words: “…this is about a matter that should be at the highest importance to every American, my hair.” After the congressmen gasp she proceeds to explain how her experience in a beauty parlor taught her about how everybody can make a difference if they care.

I want to talk about my fingernail. Well, maybe not my nail but about fingernails in general and what they can teach us about life and work and making a difference.

Most people will probably remember Michael Phelps for his record of eight gold medals in a single Olympics. It was an exciting accomplishment, one that we may never see duplicated in our lifetimes. It was the well-deserved honor of the kid from Baltimore who labored for years, swimming 8 hours a day, burning up 12,000 calories a practice, focused so intently that, as he put it, all he ever did for years was eat, swim and sleep.

In the middle ages there were devout worshippers who sacrificed their lives in singular pursuits. Saint Simeon Stylites sat on top of a column for 37 years praying for eternal salvation. I certainly hope he earned a seat next to St. Peter since I don't think a gold medal would have been enough to compensate for decades of only eating, sitting and sleeping. Yes, apparently he had his food sent up to him by rope.

I have to admit I am almost more impressed by the thousands of athletes who have worked as hard as Phelps but never stood on the top platform to see their country's flag raised. Imagine
the hours of devotion and drudgery and then having to leave the Olympics with nothing to show for it.

No, I honor Phelps for a different reason. When I think of Phelps I do not think of the eight medals but of one medal, the seventh, earned for the 100 meter butterfly that he might have lost.

Yes, lost. As Phelps turned at the wall for the final lap he was behind Milorad Cavic, the Serbian swimmer in the next lane. As he approached the wall he was a half body behind Cavic, an impossible distance to make up. But then a miracle seemed to happen. Phelps took another stroke, lunging with his arms to the wall as Cavic, who did not have enough room to take a stroke, glided toward the finish line.

Phelps won, by one hundredth of a second. One hundredth of a second after a race of 50.58 seconds. 5,058 hundredths that is. At that speed and distance his victory was the length of a fingernail.

Apparently swim coaches teach their athletes to pace their strokes the way hurdlers judge distance to the next hurdle. Curiously, there was an article about this published just days before Phelps' seventh race. The idea is to prepare to arrive at the wall with speed, enough to overcome one's opponent as well as trigger the pressure-sensitive clocks at the wall. These clocks are calibrated so they react to touch and not to the wave action in front of them. After the race the Serbians, and much of the swimming world, reviewed the race to determine whether the Omega clocks required too much pressure and unfairly favored Phelps’ lunge. Ironically, Omega was one of Phelps' sponsors. But the review confirmed that it was not a technological
glitch or some unseen hand reaching out from the clouds to guide this remarkable athlete.

Was it luck? Luck is what happens when your rival on the parallel bars fails to stick a landing and loses a point. Was it skill? Cavic was as skilled and, in fact, swam a better race. No, it was Phelps who got to the wall first because he wanted to, because he needed to, because he would not settle for second or take his victory for granted. He earned that gold because he worked for
it, one fingernail length more than the next guy.

A fingernail, maybe, but a metaphor for what we can do when we stretch ourselves, when we take one more stroke, when instead of coasting we lunge at the finish line of our dreams.

If brevity be the soul of wit...

2008-08-18T15:03:00.002-04:00

People sometimes say I am wordy. I paged back through some earlier blogs and regret to report that they are right! I guess I forgot the old adage: “God gave us two ears and one mouth so that we would listen twice as much as we speak.”

I was reminded of this when reading a recent story in the Atlantic by one of my favorite writers, Nicolas Carr. The article, “Is Google Making us Stupid,” suggests that we have lost our capacity for reading lengthy, nuanced articles as we have become accustomed to assimilating information in easily digestible form. We like our oral communication in sound bites, our written communication in bullet points. We’ll watch an hour-long Powerpoint presentation with rapt attention, but listen to a 20 minute speech? Never!

As the world becomes “googilized,” people are reading less and absorb information differently. It would be easy to assume that this is a generational phenomenon, that while Gen X-ers under 25 might be comfortable with bits and bites and rest of us are still happy to read epic novels like War and Peace, thank you very much! Sadly, that is not the case. When an email comes in that’s very long, I often put it aside or print it for later. Sometimes I forget about it. I’m sure others do the same. The long and short of it: It is better to be brief, and have somebody listen or read what we say, than wordy and lose our audience altogether.

We could fight against the tide and continue to write lengthy missives to each other. Or we could recognize the need to adapt to our customers and colleagues and change the way in which we communicate. I think we need to adapt. My recommendation: In our emails and other communications we must:

Use bullet points, wherever possible
Keep paragraphs and sentences short
Summarize information

I have recently reminded my colleagues at MXenergy that we need to apply these lessons not only internally but in all of our communications, including:

Emails and letters to customers
Advertising copy
Website copy

Btw, I hope you’ll forgive the FYI. For now, g2g.

A Plug for Team USA

2008-08-11T17:48:00.004-04:00

Watching the Olympics over the weekend I was struck by a comment by one of the coaches. It may have been during the USA/China basketball matchup last night, said to be the most widely viewed sporting event in history, with perhaps as many as 700 million viewers. They call this year’s team the “Redeem Team” because they are eager to redeem themselves from the ignominy of our defeat by the team from Greece during the summer Olympics in Athens four years ago. Thank goodness the “home team” advantage did not apply this year as well!

Many people have noted that this year’s basketball team has taken a different approach. In 2004, the players who headed to Athens could barely control their Olympic-sized egos. This year, each player seemed to blend into an almost seamless choreography of graceful athletes, no one player standing out from the rest. Kobe Bryant could have been expected to steal the attention from some of his lesser known colleagues. Instead, he was almost invisible on defense, grabbing the rebound; the only stealing he did was robbing the Chinese of one basket after another. Lebron James, nicknamed “LeBronze” after Athens, was the consummate leader as co-captain, pulling instead of pushing his teammates to victory.

And then I heard the coach say: “It’s not the player’s name on the back of the jersey that counts; it’s the team name on the front of the jersey.”

We live in a world ablaze with the incandescence of celebrity. Our media stalk the rich and famous, gawking at their private lives and public foibles, aping their style choices, soliciting their opinions. Our popular movies follow heroes and add to the fame of actors who tell the stories. Our newspapers sell the juicy gossip of the illustrious while our magazines attract readers with their pictures. Our concert halls and stadiums are filled by shouting fans who would spend as much on tickets as a family of four in the Sudan makes in a year. People that are so egotistical we would probably evict them from our dinner tables are interesting enough for us to talk about ad nauseam with our friends, even use as role models for our children.

That is why the Olympics stands out. For two glorious weeks in the summer every four years we get to watch what happens when, for a few precious moments, egos as big as the ocean are mixed, blended and transformed beyond recognition, like the ingredients in a fine soufflé. Whether they are playing individual sports like tennis or biking, or team sports like hockey or volleyball, they wear their uniforms proudly, displaying the front and not the back. Imagine what one rower can do in a skull; now think of eight rowers, their movements synchronized, almost floating over the water. The gymnast on the rings is a sensation; but to watch the teammates urging each other onward with intense mental concentration through each heroic move, each inadvertent misstep, that is sublime. Take a basketball player, a craftsman at the free throw line. Now watch him rising into the air above a basket, taking a pass from a teammate and redirecting it with a subtle twist of his hand; he is transformed into a graceful member of a corps de ballet, a dancer whose feet walk on air.

Sometimes I think we love to watch sporting events because of what they say about us as human beings, about the way we transform our own dreams and ambitions into impossible achievements. The effort, the win, the new record, are all metaphors for our lives, personal and professional. As we root for others we are really rooting for ourselves, for the home team, for the family and friends up in the stands, for our aspirations and our achievements. And when somebody fumbles, we enjoy that, too, because it reminds us that we are human after all.

Recently I’ve had the pleasure of watching a similar team effort, every bit as awe-inspiring and probably more important than many of the sporting events I’ve enjoyed in the past … and then quickly forgotten. We at MXenergy have been working on a new project that has the promise to transform our ability to communicate with our customers. It will help explain to our customers the risk of energy price volatility and the importance of what we do when we offer them price protection. The project is akin to a gymnastics meet, demanding intense concentration from every part of the company. I have been overwhelmed by the way our team of professionals has been working

together, passing the ball and not hogging it; supporting each other and not undercutting each other; sharing the limelight and not stealing it.

Tonight the women’s gymnastics are on. I can’t wait.

Neither Rain Nor Snow Nor Heat Nor Gloom of Night...

2008-06-09T12:25:00.001-04:00

When you’re in the energy business, you spend a lot of time watching the weather. In the middle of winter the weather channel is as much an obsession as ESPN is to a die-hard football fan. Give me a tropical storm forming off the coast of Africa and my heart races like a high school student before the senior prom. Balmy weather in the middle of January? Spring-like days in July? Bah, humbug! I’ll sit inside and mope, thank you very much.

But weather is supposed to provide entertainment, not inconvenience. When the power to our building in Stamford was cut off a couple years ago because hot temperatures melted the underground pipes carrying the power lines, I was annoyed. And when I heard that our Maryland Customer Call Center lost power today because of severe thunderstorms, I thought: “This is going entirely too far.”

Our call center representatives take as many as 70 calls a day each and they pride themselves on two statistics: First, the number of calls picked up within two minutes (86% last month) , and second, the number of customer issues resolved on the first call (92%). They are the unsung heroes of MXenergy, working tirelessly every day to explain our price protection plans, to answer questions about monthly bills, to resolve occasional complaints (yes, we have a few).

Our call center ambassadors are the face of MXenergy, our spokesmen, our good will ambassadors. Not only must they be computer literate and able to access customer information and input data quickly and accurately. They must also be familiar with the enrollment details of 36 different utilities throughout the country. After all, we serve customers in more states and utility territories than any other retail energy marketer in the world. Often they are called upon to make lightening quick judgments. The next phone call could come from Vancouver, British Columbia or from Athens, Georgia. A customer could be calling from a small town in the Texas panhandle or from an apartment on Third Avenue in New York City.

Not all of the calls are pleasant chit-chats. Fortunately, most customers are calling to enroll or to understand their woefully complicated energy bills. But then there are other calls: Energy prices are high and I’m having trouble paying my bills. (We’ll try to work out a payment plan.) Why are my gas bills higher if I’ve lowered my thermostat and have a fixed rate? (Probably because it’s colder outside and you’re consuming more energy.) Why is my renewal rate for electricity supply higher? (Because wholesale electricity costs have risen over 70% since last year.) Customers rarely call to tell us what a great job we’re doing in keeping energy prices low.

But through it all our reps always smile! That’s right, they smile – through the phone! Try calling them some time and you’ll be amazed. You can see them smile because they’re so doggone friendly, even when you call to complain. It’s positively disarming!

So when I learned that the thunderstorm had closed down our call center I was concerned. Not because we might lose some calls. I knew that our customers would not know the difference, because phone calls to our call center would be automatically diverted to another center in Florida. No, I was concerned about our customer reps. What would they do? How would they spend the rest of the day? How would they cope with the deafening silence? Would they suffer withdrawal symptoms like a smoker that goes cold turkey? Would they sit in the stormy darkness, watching the lightening bolts and counting the seconds to the thunderclap?

I imagined them at their stations, ear phones on, fingers poised over the keyboard, eyes fixed on their blank screens, ready to spring into action as soon as the phone lines opened up. The clocks would have stopped and everything would be in a state of suspended animation.

Or maybe they all pushed back from their desks and took a simultaneous break for the first time ever. After all, they can never all be away from their desks at the same time, since somebody is always calling. Now they could stand up, meet each other in the middle of the office (smiling of course), break out a bottle of champagne. Somebody tunes into 98Rock in Baltimore and they start to dance.

Then a couple hours later the skies brighten, the rain stops, and suddenly the hum of the computers and the purr of the telephones returns. Slowly, the life of the call center returns to normal. The calm, steady, smiling voices return. “Thank you for picking me up so quickly. My utility bills are getting out of control. Do you think you could help me budget my energy costs?” “No problem…”

Herodotus, the Athenian historian, wrote something that was translated and inscribed in the pediment of the New York Post Office: “Neither snow nor rain nor heat nor gloom of night can stay these couriers from the swift completion of their appointed rounds.”

I hope the ancient Greeks will forgive me if I add a little coda: “And neither shall thunderstorms or tempests prevent our customers from getting through to their customer reps when they need them!”

What, Me Worry?

2008-06-04T14:29:00.004-04:00

As a kid I was a fan of Mad Magazine. I enjoyed the antics of its smiling, freckly, gap-toothed cover boy, Alfred E. Newman. Alfred E. Newman had the perpetual look of a child caught with his hand in the cookie jar -- or should I say with his hand stuck in the cookie jar, as if he was simultaneously afraid of being caught and humored by his predicament. It was a look of bewildered puzzlement. “What, Me Worry?” was his constant refrain. “Sure my hand is stuck and I’m in pain,” he seemed to say. “But this is so absurd I have to laugh.”

As an adult I tried unsuccessfully to turn my kids onto Mad. Alfred E. Newman was still there – he hadn’t aged a week in thirty years. But cookie jars were out of fashion and if it isn’t on a screen it doesn’t count. Alfred would be shocked to find himself lost to the ages in the company of goody two-shoes like Little Lord Fauntleroy.

I was reminded of Alfred E. Newman as I stood in line filling up my gas tank recently. I had to take a picture of the result: 18 gallons cost $77.38 at $4.299/gallon.

Why, not too long ago you could have flown from New York to Fort Lauderdale on Jet Blue for $75! I looked across the island at a young man who was filling up a Honda, probably his first car. He had freckles and was smiling; there was a gap in his front teeth and … could it be? He had this look, as if to say: “What, Me Worry?” In other words: “These prices are so absurd, I’m not sure whether to laugh or to cry, so I might as well laugh.”

Practically every night these days there is a news story that the AAA reports the average price of gasoline hit a new high. Of course, if the average nationwide is $3.60 we can be sure the price in Connecticut will be $4.40; our taxes are among the highest in the country. Now, look closely at the news reporters and you will see that same expression of puzzlement. “Hey, we aren’t making this stuff up. Really: Just go out and look for yourself. It’s unbelievable…”

Let’s face it. We really are faced with a new world. For over a century since the first oil find in Titusville, PA, energy costs were relatively low in the United States compared to other parts of the world. We were blessed with local production and with competitive markets that held down the price of refined products. But over the past few decades declining domestic production, environmental restrictions on new refinery capacity, and increased demand from abroad have shifted the supply and demand balance. As more of the world enjoys the benefits of economic prosperity, we find ourselves in line with everybody else for the globe’s limited energy supplies.

As prices rise to previously inconceivable levels, we feel bewildered and puzzled. Other countries have faced these pressures for years, and have reacted with smaller cars and lower consumption. We know what needs to be done – e.g., conservation, fuel efficiency, alternative energy supplies, new nuclear power plants – but we also know that these are long term solutions. We have been lulled to sleep in a fool’s paradise of low energy prices and suddenly we are waking up to a new economic reality. The situation is so absurd that we don’t know whether to laugh or cry.

Absurd or not, we do need to get serious about energy policy. Alfred E. Newman may not have grown up but the rest of us have no excuse. The adults in our nation’s capital need to wake up to the new economic reality. One would hope in a presidential election year there would be serious debate about energy policy. Instead, most of the talk is political posturing about gasoline prices. It is not Exxon’s fault that gasoline prices are high. That company is simply selling its product at the market. If they gave it away their shareholders – people like you and me – would be outraged. We can’t deny the hard working people of the developing world the opportunity to improve their lives.

But we can help introduce competition through alternative energy supplies. We can lower demand by improving the efficiency of our energy guzzling economy. We can expedite inexpensive – and safe – nuclear power plants.

“What, Me Worry?” You betchya. No more cookies for you, Alfred. Time to grow up and get to work!

A Tale of Two Neighbors

2008-06-03T10:46:00.001-04:00

It was the best of times, it was the worst of times. It was the age of new technology, it was the age of high energy bills, it was the epoch of enlightenment, it was the epoch of political posturing, it was the spring of environmental consciousness, it was the winter of global warming.

So might begin a modern day version of Charles Dickens’ Tale of Two Cities. But today I had a delightful conversation with one of our customers in Georgia and I may need to write a different book: A Tale of Two Neighbors.

My novel – I would say “true story” but Oprah Winfrey would get upset that I am changing some of the details – begins on a pleasant suburban street where two neighbors, both customers of MXenergy, are having a conversation over the border of bright red peonies that have blossomed between their two yards.

The first customer --- Mrs. Adams, I’ll call her – shares with her neighbor – Mr. Morgan – the good news that she has just received an offer from MXenergy to “blend and extend” her fixed price contract for another year. The new rate is slightly higher than Mrs. Adams old rate but it is substantially lower than the current rates that MXenergy is offering new customers. What MXenergy has done, Mrs. Adams explains, is “blend” her old rate into the new rates and “extend” the term of the contract for another year.

Mr. Morgan is delighted at Mrs. Adams’good fortune. But at the same time he is puzzled. Mr. Morgan, you see, has also been a loyal customer of MXenergy. But he did not get this offer. In fact, when he returns home and pulls out his latest bill he finds that his price is substantially higher than Mrs. Adams’ new rate.

Mr. Morgan calls MXenergy and inquires why. Unfortunately, a new customer service representative loses his call. Understandably annoyed, but still amazingly patient, he complains to his elected officials and sends a note to MXenergy expressing his disappointment.

One day, as I am passing the water cooler – literally – I hear about Mr. Morgan and his tale of frustration. I think to myself: If the politicians in Washington can’t understand energy prices, how can I expect Mr. Morgan to figure them out? So I decided to call Mr. Morgan and talk to him.

Mrs. Morgan answered the phone and soon I am having the most pleasant conversation with both Mr. and Mrs. Morgan. First, I express gratitude for their loyalty all these years. I explained to them that MXenergy as well as Shell Energy Services, a company that merged into MXenergy in 2006, had set out in 1999 to help customers like the Morgans protect themselves from higher energy prices. We did this by offering customers a fixed rate for 1-3 years, similar to a fixed rate mortgage.

But then I had to deliver the bad news: We cannot offer them the rates we offered Mrs. Adams. You see, it appeared that when the Adams’ and the Morgans’ first enrolled with MXenergy, both families opted for fixed price protection. Their timing was excellent, as prices started to rise in 2000 and with the exception of a dip in late 2001 and early 2002 they haven’t looked back since. Both had the benefit of fixed price protection for the first couple years.

But then in 2004, when the Adams family renewed its fixed price protection plan, the Morgans decided to switch to a variable price plan. This may have worked out for the Morgans in 2006 and 2007, when energy prices dropped temporarily. But by late 2007, prices started to go up again. By late spring of 2008, natural gas prices were 89% higher than a year earlier. When we at MXenergy saw the higher prices, we decided to offer our fixed price customers – including the Adams – a chance to switch onto a longer term price that would “blend” their old rates with the current higher rates. By doing this we could offer a lower price than the market.

Unfortunately, for variable price customers like the Morgans, we had nothing to blend. We could only offer current prices which of course are much higher.

The Morgans took the news with grace and good humor. Mr. Morgan had retired some time ago but he was clearly a sophisticated businessman. He and his wife immediately grasped the risk that they had taken – and for a time had benefited from – when they opted for variable prices.

“Can we sign up for your fixed price now?” Mrs. Morgan asked.

“Of course,” I said. Fortunately we had a senior rate that I could offer which was substantially below our current rate for other new customers. I promised the Morgans a customer service representative would call them soon to confirm their decision.

I don’t think Mr. and Mrs. Morgan would necessarily quote Sidney Carton at the end of Tale of Two Cities: “It is a far, far better thing that I do, than I have ever done.” But I hope they are happy with their fixed rate plan: long term fixed price protection.

Of course, we don’t guarantee that prices will go up or that fixed prices will be necessary. But fixed prices are like insurance: better to be safe than sorry.

The End.

What the H*** is Going On with Energy Prices?

2008-05-28T16:01:00.003-04:00

I have been doing the rubber chicken circuit recently - visiting Rotary clubs throughout Connecticut to talk about skyrocketing energy prices.

Connecticut, one of 14 states and 2 provinces where MXenergy does business, gets a double whammy. First, it’s a state where natural gas fired electric generation has seen utility prices increase by over 50% in the past year (24% since March alone.) Second, gasoline taxes are reputed to be the highest in the country, so when you hear on TV that the price per gallon is around $3.60, pity the poor souls in Connecticut where the average price is nearing $4.40.

A brief apology and to be fair, it’s not all chicken and it’s certainly not all rubber. I’ve had some great meals and I’ve eaten almost as many scrambled eggs as chicken at the breakfast clubs for insomniacs like myself.

When I speak to a Rotary club I begin with the question “Why are energy prices so high?” The answers are sophisticated. People really do have a sense of what’s going on. Here’s a recap of what I hear:
* High energy demand from the developing world (read: China and India)
* Declining production of oil and/or gas fields in Russia, Saudi Arabia, Venezuela, not to mention the US and Europe
* Increasing electricity demand from all the gizmos we love (air conditioners; microwaves; computers and printers; answering machines; cell phone chargers; etc.)
* Speculative trading interest
* Greed

All of these play some role in the higher prices, although I do not believe the last two are major concerns. Prices have gone up recently despite speculators, not because of them. The “smart money” has been betting that prices will go down, which pushes prices down temporarily. Unfortunately, when many of these speculators lost money, they needed to stop their losses and their buying may have had a short term bullish impact on prices. As for greed, ask yourself whether a company like Exxon, owned by shareholders like you and me, should set the price of its commodity below prevailing market levels? If you are pricing a chair for sale at a tag sale, do you price it at where people will buy it or do you give it away?

Sometimes I need to distinguish between different forms of energy: crude oil, natural gas and electricity. Crude oil is the source of refined products like gasoline, diesel and heating oil that fuel transportation, home heating, and much industrial production. Natural gas is used for heating and more and more for electricity generation. Electricity is a manufactured product from several fuels, most notably coal, natural gas, nuclear, wind, solar and to a limited extent fuel oil.

All of these forms of energy are plagued by a delicate balance between supply and demand. If the world were awash in energy, like it is of air, it would be cheap. But shortages create upward price pressure and not only for the original form of energy like crude oil and natural gas but also for the byproducts like gasoline and electricity.

What can we do about it? Here, too, the answers are astute. Lower consumption is the most popular, but here I must caution my listeners. How many of them are prepared to toss their microwaves and computers into the landfill or dispense with their need for air conditioning and instant cell phone communication. True, we can all cut back by utilizing demand side management like setting the thermostat, more efficient hot water heaters, cars with better mileage, shorter showers, etc. But for all our efforts at efficiency, our cumulative lust for energy grows unabated.

Opening up new sources of supply is another potential approach. But aside from northern Alaska or the newly discovered fields off of Brazil, there have been no new and unexploited oil fields found for many years. And don’t hold your breath for the first rigs to pop up off of Miami Beach or Malibu. Nuclear? Youbetchya, until you consider that the first plants in 30 years have been licensed only recently and they may take 20 years to build.

Alternative energy? The best idea, perhaps, but also the longest lead time. It will be years before solar is cost-effective or wind is reliable. Recently, wind generation in Texas, the largest wind producer in the country today, was held responsible for peaks in electricity prices to $2,300 per megawatt hour, up from a normal $80 or so, because when the wind dies the grid needs to replenish supply quickly from costly peakers.

Is there anything else?

Yes, but the answer may not be what people want to hear. It may be that we have an energy crisis because prices are too cheap, not because it is too expensive. In Europe, prices are substantially higher than here in America. Costs for energy sources like gasoline and electricity are 50-100% higher than we pay. As a result, Europeans drive smaller cars and keep their electricity usage down. Their overall bills may be the same as ours, but their consumption is less.

I am not advocating higher prices. At MXenergy, we lock in prevailing market prices and offer the benefits of price protection to our customers. But I am advocating leadership. We need leadership from Washington and a serious assessment of long term energy policy, not to win votes in the next election but to address the need in our country for safe, reliable energy supply at reasonable cost.

Energy Customer Bill of Rights

2008-05-08T13:11:00.004-04:00

OK. I know I’m developing a reputation as a curmudgeon, a crank, a whiner, a crab, a bellyacher, a griper. In short, a sourpuss. And that’s without consulting the Thesaurus. I could add grumbler, bear, malcontent, moaner, kvetch. You get the idea.

And why have I earned these pleasant monikers? Because I seem to take pleasure in recounting a never-ending parade of consumer nightmares – my own. Nothing makes one more sensitive to consumer rights than being in a consumer service business. Knowing how hard we work to help customers get good service at fair prices – and receive accurate bills to boot – it boggles my mind how oblivious most companies are to the most basic principles.

In this blog I have recounted my unsuccessful effort to snag an extra bag of peanuts on Delta. Of getting documents copied at FedEx/Kinko’s. I’ve even told of one of our Georgia customer’s sad experience of having their gas turned out because they claimed that their MXenergy bill – yes, we drop the ball too sometimes! -- looked like junk mail.

Recently I have added another one to my litany of woe: Showing up at the City Transit terminal in Chicago’s O’Hare Airport.

Here’s my tale. If you’re a cheapskate like I am, and don’t want to take the train from O’Hare to downtown, it will cost you $2 on the train…that is, if you have exact change. You see, the automatic ticket machines at City Transit only take exact change. If you have a $10 bill you must spend it all…or you can walk. Arriving at the turnstile – with my train idling on the platform below -- I asked an attendant at the ticket booth – who does not sell tickets, of course – how to get change. “Walk down the hallway,” he pointed, “and you can get change.”

I sighed. I mumbled. While my train departed on the platform below, I proceeded to drag my luggage in the direction he indicated. About 50 yards away I came to a stop in front of a large picture window with this sign: “Checks cashed here” and then below another sign: “We charge for making change.”

“What?!” I exclaimed. “You charge for changing a $10 bill?“

Being true to form, I could not bring myself to pay a dollar to make change. So I asked where I could buy some breath mints. “In the Hilton Gift Shop,” came the helpful reply. I continued along the hallway – another 200 years with my heavy suitcases – and finally arrived in the gift shop.

Ten minutes later – still dragging my luggage --- I returned to the train platform in time to see the next train leave the station without me.

“Excuse me,” I asked the station attendant. “Why don’t you have a change machine?”

“Oh,” he replied, “They took that out of here seven years ago.”

“And why don’t ‘they' replace it?” I asked.

He shrugged his shoulders.

“I hope you have complained to your manager about this,” I said, “because I am your customer and I am sure I am not the first person to ask you for change over the past seven years!”

At MXenergy we talk incessantly about the “customer golden rule: do unto our customers what we would have them do unto us.” But the rule is about as common as finding $1000 bills lying face up in the gutter. Recently, our marketing team had an inspiration: Why don’t we adopt an Energy Customer Bill of Rights, just like the rights that airline passengers are trying to achieve.

So here it is: MXenergy’s equivalent of the Declaration of Independence, a clear statement of what our customers can expect when they do business with us… or else!

MXenergy Customer Bill of Rights
You have the right to be treated as if you are our most valued customer. Because,
frankly, you are.
You have the right to speak with a real person, quickly.
You have the right to fully understand your bill. If you don’t, we’ll work with you to make sure that you do.
You have the right to privacy – we will not share your personal information with anyone outside the company.
You have the right to switch your service at any time, and we’ll ensure the process goes smoothly.
You have the right to have us listen and work with you to resolve any problem.
You have the right to uninterrupted service. And if your service is interrupted, we’d better have a good reason for it.
You have the right to not be surprised. The rates we quote are the rates we charge.
You have the right to have us help you find the best rate plan – for you, not us.
You have the right to deal with a company that prides itself on ethics, customer service and environmental stewardship.