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Word of mouth powers energy supplier Third-party provider’s associates do heavy lifting as company pushes green alternatives

- Last modified: February 23, 2011 at 1:36 PM

Joseph Occhiogrosso, president of All Pro Title Agency, in Morristown, saw business slow to a painful crawl when the recession and mortgage crisis hit in 2008.

ON3So when he saw an opportunity to earn supplemental income by selling lower-priced electricity to residential customers, a light bulb went on in his mind.

“I knew it was a booming business on the commercial side,” said Occhiogrosso, now a leading energy salesman for the third-party electricity supplier Viridian Energy. “But I’d never really heard about any opportunities in the residential side,” which he called “a 99-percent untapped market.”

Connecticut-based Viridian is one of more than two dozen third-party electricity suppliers who have begun offering service to residential customers in New Jersey in the decade-plus since the state passed its energy deregulation law. Customers who switch are still served and billed by their utility company — only the supplier changes.

Viridian has about 140,000 customers in its four-state territory, and has plans to expand to New York and Illinois in the coming months. Nearly half of its customers — 69,000 — are in New Jersey.

Viridian can beat the state’s utilities on price, but its CEO, Michael Fallquist, believes its clean-power emphasis is another strong selling point.

“In all of our markets, we commit to a minimum standard of 20 percent green” energy, he said. That figure puts Viridian well ahead of the state’s renewable portfolio standards and offers customers a tangible way to help the environment.

Fallquist hopes the company’s low rates and green image will sway customers, but it’s the way he conveys that message that’s unique. Viridian uses a small army of associates — about 7,200 in New Jersey and a total of 12,500 in its four-state territory — to sign up new customers. Those associates sit with down with friends and neighbors, analyze the potential customer’s electric bill, and pitch Viridian. Associates receive a monthly commission for as long as that customer stays with Viridian.

Henry Aymonier, who lives in the Sandy Hook section of Middleton and owns a boating school, became a Viridian associate last March, after a friend approached him about the company. He said potential customers often fear their service might be affected if they switch.

“That’s one of the reasons people don’t respond to the fliers and the phone calls and the billboards,” he said, “and why they do respond to a Viridian associate talking to them, because we can go through all that and talk to them about their fears.”
Aymonier said he now has 800 associates in his business, and 9,000 customers. He makes roughly 75 cents per customer per month.

Occhiogrosso has 11,000 associates in his business. As an early adopter, his business is responsible for the vast majority of Viridian’s New Jersey customer base, the company said.

Occhiogrosso said many customers decide to become sales associates.

“It’s funny because we kept saying, joking around, we’re going to have a tough time getting customers,” Occhiogrosso said, “because everybody wants to do the business.”

Fallquist said most of those associates are part-timers. He said they even have some nonprofits who sign up to sell Viridian, albeit passively.

That model has made Viridian a major player in the New Jersey market, where about 160,000 residential customers had switched to a third-party provider as of December, the most recent month for which data were available. That’s about 4.8 percent of eligible customers, according to the Board of Public Utilities.

Stefanie Brand, the state’s rate counsel director, said she has seen different marketing models, and does not have an opinion about whether any are better or worse than other strategies. But she said no matter how they’re approached, consumers need to do their homework.

“If people are entering into deals with their eyes open, and know what they’re getting into, it can be a good thing,” she said.
Brand said the main reason the third-party residential market is heating up is because new natural gas sources have allowed third-party providers to offer significantly lower prices than regulated utilities. Electricity rates charged by the utilities are based on wholesale prices over a three-year period. That system protects ratepayers from one-year spikes in costs, but it also means utilities’ rates are slower to come down when the price of wholesale electricity drops.

Despite the lower cost of natural gas, Fallquist said his company still faces pricing challenges, because green energy is more expensive to produce. Still, he said he believes in the long term that his strategy will result in a larger, more profitable company.

E-mail to:  jkaltwasser@njbiz.com

CORRECTION: The print version of this story incorrectly reported the number of Viridian's associates. The figure has been corrected above.

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