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Business is growing for Phila. energy suppliers

The similarity between credit cards and electrical power may not be immediately apparent. After all, most electrical utilities won't even let customers pay their monthly bills with plastic.

But former bankers Richard Vague and Kevin Kleinschmidt saw huge potential for marketing electricity in deregulated energy markets much as they had sold credit cards - by tying sales of an anonymous commodity, kilowatt hours of electricity, to customer-loyalty plans like airlines' frequent-flier programs.

Their experience marketing credit cards inspired the creation of Energy Plus Holdings L.L.C. in 2007. In less than three years, the Philadelphia company has expanded to 140 employees and now counts 150,000 customers in six states. The company says sales grew from $60 million in 2009 to $150 million last year.

The firm officially moves into larger headquarters Tuesday, a 40,000-square-foot full floor in the University City Science Center at 3711 Market St. Mayor Nutter is scheduled for a morning ribbon-cutting.

With sales taking off in Peco Energy Co.'s recently deregulated territory - Energy Plus says it has snared about 5,000 Peco customers so far - the company's cofounders expect growth to continue apace this year. Vague anticipates 2011 sales will hit $250 million. The new office space will accommodate an additional 90 employees.

"There's plenty of room to grow in this business," Vague, the company's chairman, said in an interview Monday, while workers unwrapped six-foot-tall potted plants to decorate the new offices.

Vague founded First USA Bank and later Juniper Bank, which became Barclaycard US. The Delaware banks gradually focused on marketing affinity cards to set themselves apart.

Much like the crowded credit-card market, dozens of companies are attempting to distinguish themselves in deregulated electricity markets, where alternative suppliers provide energy while incumbent utilities like Peco remain in place as distributors of power over their networks of wires.

In a market where nothing distinguishes the commodity itself - the electricity flowing off the grid is the same, regardless of supplier - some companies are emphasizing their low fixed rates. Others are touting the "green" sources of their power. Some are giving away gift cards as signing bonuses.

Several suppliers are building elaborate multilevel sales forces modeled on Amway and Mary Kay Cosmetics that build on "warm" relationships among friends and families.

Energy Plus is building on a different sense of loyalty - to established affinity programs, such as the American Airlines frequent-flier program or the Marriott Rewards program.

Kleinschmidt, Energy Plus' chief executive, said his company's offers were more likely to be viewed by customers because they arrive in the mail bearing the markings of their favorite loyalty program.

"It helps us stand out in the clutter of potential customers' mailboxes," he said.

Energy Plus sells power only at rates that may vary from month to month, depending on market conditions. Though its current offering in Pennsylvania and New Jersey appears to be competitive - 8.95 cents per kilowatt hour for Peco Energy Co. customers, about a penny below Peco's price-to-compare of 9.92 cents - the company does not post its prices on its website (

"It's necessary to be competitive, but it's nice to provide something besides price," said Kleinschmidt, who worked with Vague at Barclaycard before founding Energy Plus.

The new Energy Plus offices are teeming with young people - Kleinschmidt said the average age is 32, and a typical starting salary for a customer-service representative is about $30,000. Regardless of salary, everybody gets the same size cubicle, including Vague and Kleinschmidt.

In a market where most companies maintain their headquarters out of state, Energy Plus says it is the only supplier serving the residential market - other than the nonprofit Energy Cooperative of Pennsylvania - that is domiciled in eastern Pennsylvania.

Vague, who lives in Center City, said the company had recruited technology experts and energy traders from out of state. It also recruits actively among graduates from nearby Drexel University and the University of Pennsylvania.

"We're bringing a lot of high-level intellectual power to Philadelphia," Vague said.

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Media Contact:

Kristen Fitch

Kristen Fitch

Senior Director, Marketing