Startup cranks the volume to help lower hydro bills
EnPowered taps into potential of group purchasing by turning households into bulk-energy buyers
What preoccupies 24-year-old Tomas van Stee most is electricity bills.
Energy may not be the most popular industry for startups — but van Stee saw an opening.
“If this industry is this hated, that must mean there’s an opportunity to fix it,” he said.
The same day electricity prices rose again in Ontario earlier this year, van Stee launched a project offering bulk rates to people who use most of their electricity during the day.
On May 1, he introduced his company EnPowered’s “group-buying” service. It puts all the customers who use 50 per cent or more of their electricity during the day into one buying group. The group becomes a large-volume user, allowing them to pay less.
It’s van Stee’s way of helping “fix a broken industry,” he says. Electricity prices have soared over the past decade in part to compensate for the artificially low rates of the past, and in part due to the province’s promotions of wind and solar power.
The price is expected to rise as the province pays for nuclear power plant refurbishments, a potential cost of $12.8 billion.
Van Stee came up with his idea after he learned his parents had locked into an expensive electricity contract with a private utility. Utilities in Ontario have been criticized for convoluted and unnecessary charges, ballooning individuals’ bill costs.
“As sad as it is, I can’t even help my own parents” because their contract has locked them in for a determined period of time with a hefty price to pay if they decide to leave early, he said, adding that EnPowered doesn’t charge cancellation fees.
He’s consulted with about a dozen small businesses in setting up the project and is introducing them to group-buying, which he says should save them just under $1,000 a year.
The rest, he hopes, will come through word of mouth and outreach.
To be part of a group benefitting from the market rates, users must sign up with their local hydro account number (which can be found on their bill).
The market rate is designed for large users whose electricity is running at all times and for whom peak rates would cause astronomical pricing.
When van Stee has 25 customers or five small businesses, he sets up a volume account with the utility, which switches them over to market pricing as if they are part of a larger entity.
“I can go to a supplier and say, ‘I’m not just representing one home; I’m representing 100 homeowners,’ ” van Stee explained. “Suddenly, that volume is as big as a factory and you can . . . negotiate better pricing.”
Van Stee says he can help those who use most of their electricity during the day because in Ontario, electricity prices fluctuate according to the time of day. The peak period is 11 a.m. to 5 p.m. on weekdays, when prices rise to 18 cents per kilowatt hour.
He says he can’t help the average homeowner — who uses about 36 per cent of their power during the day — because the savings aren’t worth it yet.
Despite the little competition van Stee faces, he acknowledges people may be skeptical “of companies promising energy savings because of the history in the industry.”
Van Stee started the company last June after quitting his job at a Toronto consulting firm he’d worked at since graduating from university.
He’d always wanted to be an entrepreneur, making it the focus of his degree at Western University’s Ivey Business School. Energy wasn’t part of the plan, but when a friend introduced him to the sector, “I started looking into it and just realized how bad it was,” says van Stee, who was born in Holland.
EnPowered is almost entirely funded out of his pocket, except for a $5,000 grant from the city of Kitchener.
Van Stee runs the business out of University of Waterloo’s Velocity Garage, a startup incubator. Friends and former colleagues have also lent hands, van Stee said. EnPowered makes about onetenth of a penny per kilowatt hour, which he says adds up to about 80 cents a month from an average household.
Van Stee’s mentor at Velocity, Wes Worsfold, is optimistic. “I really like the concept and I think it meets a real need,” he said.
He added that part of the challenge for EnPowered will be to educate customers and gain their trust.
Then again, “Who doesn’t want to save money on their electricity bill?”