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Startup Wins $4M From KPCB to Help Consumers Shop for Energy

Startup Wins $4M From KPCB to Help Consumers Shop for Energy

Where does your energy come from and how much do you pay for it? Texans know.

Eric Wesoff
March 26, 2013

Choose Energy provides online price comparison for retail energy costs. The 13-employee firm, founded in 2008, just closed a $4 million round A from Kleiner Perkins and Stephens Capital.

Consumers can choose their utility provider in the nineteen state electricity markets and twenty-two states with deregulation in natural gas markets. But in reality, there's mostly Texas. Along with a few nascent markets such as New York, Ohio, Pennsylvania and Illinois.

Deregulation has the potential to lower prices and provide more choice and features to consumers.

But, again, it's mostly Texas. (See EIA charts below.)

Online price comparison has long been available for travel or hotels -- now it's becoming more available for retail energy pricing. Choose looks to be a "consumer-centric online energy marketplace" as well as to "provide new services to energy suppliers." 

Choose Energy focused on Texas because that state has "the greatest participation from the consumer and provider side. A consumer might have 100 or 200 choices" and risks experiencing "information overload," said Jay Webster, the President of the firm in an interview on Monday. The goal is "bringing transparency to a fragmented marketplace," he added.

The Choose Energy website lets consumers in deregulated electricity markets compare retail electricity plans based on price or features and lets them enroll online. The firm claims to have helped more than 100,000 consumers choose and sign up with a new electricity supplier. More than 40 percent of Choose’s customers have opted for 100 percent green power plans, according to a release.

“By providing a decision-making destination for consumers that’s akin to choosing a flight online, we drive new sales, improve satisfaction and dramatically cut acquisition costs," said Jerry Dyess, CEO of Choose.

Choose can also help retail energy providers (REPs) win customers and manage that relationship. The firm makes money with an acquisition fee from the energy provider.

"We're making a market more efficient," said Webster.

Webster adds that consumers can save more than $200 per year by switching to a different plan, depending on the size of their home.

The State of Texas offers the Power to Choose website, a clearinghouse for picking a REP. The Choose Energy site is a bit slicker:

Another firm in the retail energy aggregation market is Forgitit, which provides price comparisons, energy usage comparisons, and automated enrollment in energy plans.

As Katie Tweed reported, "Deregulation and consumer choice in energy have the potential to go beyond type of generation, length of contract and price per kilowatt-hour. In Texas, there are already some early dynamic pricing plans and more will be coming. Eventually, retailers may partner with other services, such as telecom, or perhaps sell solar panels."

“Traditional utilities were not built to compete for customers, or to maintain an ongoing dialogue with them,” said David Mount, partner at investor Kleiner Perkins Caufield & Byers. “Choose is building the solutions that enable retail energy providers to attract and develop lasting relationships with their customers.”

Tags: choose energy, deregulated, ercot, forgitit, kleiner perkins, kpcb, texas, utilities

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