WTG Sparks New Revenue Stream For VARs: Energy Sales


When World Telecom Group was founded in 1996, Vince Bradley already had energy on the brain. But by the time his Malibu, Calif.-based master agency was starting to make gains in the telecom channel, his timing wasn't quite right.

"Enron happened," Bradley recalled in a recent interview at WTG's headquarters. "And I was like, no way."

But with the economic downturn in 2008 making cost savings and efficiency top of mind for customers, WTG found its opportunity. According to Bradley, when WTG stood up its energy business -- Energent, a division of the WTG-affiliated Commerce Consulting Corp. -- it was the first major telecom master agent to offer such a practice.

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It took a few years to get rolling, said Bradley, but in 2011, Energent began to become a substantial revenue contributor and has finally caught on with WTG's base of agents and VARs. In much the same way it manages telecom, carrier and cable company vendor relationships as a master agent, WTG also works with electricity supply companies, or ESCOs, as a broker or distributor.

Working with Energent, the hook is that solution providers create a lucrative new revenue stream via existing customers as they start bringing customer energy usage costs in line.

"What does every business need?" Bradley asked when pressed on why IT solution providers should consider energy sales. "Every business needs communications and power."

Energent helps solution providers offer various pricing scenarios, including fixed rate energy and gas, variable rate energy gas, and blended rate electricity, which is tailored to businesses that require heavy electricity usage outside of the normal peak hours of 8 a.m. to 5 p.m.

Ideally, customers require 5,000 kilowatts of electricity or 300 therms of gas monthly. Solution providers have to learn to set pricing expectations appropriately, considering that the market settles daily -- and pricing changes -- based on trading conditions and expected utility usage.

It's not yet a national opportunity, explained Tyler Price, Energent agent sales manager, because solution providers can sell in deregulated energy markets such as Texas, Ohio, California and parts of the Northeast. But a big difference between the energy and telecom markets, he explained, is that most energy suppliers don't have the big protected account lists that solution providers tend to find from major carriers like CenturyLink or AT&T.

"It's a beautiful time right now to get into this," Price said.

Energent has continued to expand, earlier this year adding demand side management resources -- a blanket term for helping customers reduce their energy demand -- such as retrofitting, demand response and distributed generation.

According to Price, about 25 percent of WTG partners are at least looking at how to position energy, and he expects that number to keep growing. Energy deals can net solution providers residuals between 6 percent and 11 percent for a minimum of time invested, and using Energent as the back office.

"Right now, there's so much saturation for the products they already offer customers that they need something new to attract attention," he said. "It also allows them to create a lot more value for something that's essentially a billing change. It's very easy to start this."

Simple Cloud Technologies, an Orland Park, Ill.-based solution provider focused on hosted networking and monitoring services, is among recent partner sign-ons for WTG's energy business.

"You have to diversify," explained Mike Brown, Simple Cloud's CEO. "We have a strong proposition around hosted and cloud, and now we're bringing energy into that."