SES in the News!

Source: Energy Today Magazine-

http://www.energytodaymagazine.com/index.php?option=com_content&task=view&id=7107&Itemid=31

Energy Solutions

Written by Amanda Gaines   

Wednesday, 30 June 2010

An entrepreneurial spirit gave this independent energy marketing company wings 22 years ago.

Wayne Gatlin believes a competitive outlook has enabled Santanna Energy Services to remain successful for the past 22 years. When the company began as a privately held independent marketing company focused primarily on natural gas, it was one of many.

Deregulation and consolidation changed that landscape, however. And although the Austin, Texas-based organization has been approached by others looking to merge or buy it outright, Gatlin, president and CEO, said that for the time being, it’s simply not going to happen.

 “Santanna was set up originally as a means for some folks who have been rolling around in the energy business to get out of corporate America and into an entrepreneurial atmosphere where we could call the shots rather than having them called by someone else,” said Gatlin, who is the last of the founders still with the company.

Rolling growth plan
“Right now, we’re set on our course of growing the company and avoiding the distractions that come with succumbing to anyone wanting to look at our company,” Gatlin continued, referring to the five-year rolling growth plan the company introduced in January 2007.
 
The goal of the plan is to grow the company’s customer base by 20% a year. Since kicking off the program in 2007, Santanna has met or exceeded its goals each year. The company has an established commercial and residential customer base in Illinois and an expanded commodities focus that includes electricity, but Gatlin said much of this growth came from the company’s successful venture into Michigan.

Looking for a larger universe of potential customers, Santanna stepped out into the residential and small commercial side of business in Michigan in February 2010 where it had been serving the larger customer market for more than 10 years.

“Illinois is a great area for energy marketing for both industrial and residential clients,” Gatlin said. “It’s dense, and winters are cold enough that there’s a lot of natural gas consumed for heat load in the winter.”

Illinois was also a perfect place to plant marketing roots. Shortly after moving into Illinois, the company began marketing to the commercial sector. In 2000, Santanna moved into the residential sector in Illinois. The move into Michigan broadened the company’s footprint and continued Santanna’s move into the residential and small commercial market started years ago in Illinois.

“One of the reasons we wanted to step into the small commercial and residential side of things in Michigan was the
continued long-term pressure on the residential customers in Illinois, not just with Santanna but from our competitors up there,” Gatlin said.

“We’ve been surprised with the progress we’ve seen in Michigan since we kicked off in early February. We’ll work through the potential customer base there eventually, but right now, we still see a lot of potential.”

For 2010, the move to Michigan has enabled Santanna to reach its goal of growing 20% early. Gatlin said by the end of June, the company would have hit that mark.

A boon and a burden
Deregulation has been both a boon and a burden for Santanna. In 2004 and 2005, the company participated in
selling a multiple-year, fixed-price gas product to residential, commercial, and industrial customers, purchasing these packages of gas from its primary supplier and selling them to customers.

In August 2005, as Hurricane Katrina struck the Gulf Coast, natural gas prices, cash, and futures skyrocketed, compounding the high cash and futures prices of natural gas. Santanna found itself out of balance with the amount
of purchased fixed-price volumes of gas versus sold volumes.

In October 2005, the company filed Chapter 11, but by early 2007, it had risen from those dire straights, paying back all monies owed to customers and vendors with interest. During that time, however, Santanna did not pursue any new marketing programs. So when the company got back into the game in January 2007, bad press and other issues had damaged its customer base.

“We were probably serving about 24,500 commercial, industrial, and residential customers at that time,” said Gatlin. With its five-year rolling growth strategy, however, by the end of June 2010, Gatlin expects the company will serve 60,000 customers.

“The pricing market always plays a role in giving you the opportunity to or not to be competitive at any given time,” he said. “The last three years have been conducive to our being more than competitive in the marketplace, allowing us to continue on a non-stop marketing program throughout that entire period.”

The deregulated marketplace enables Santanna’s residential and commercial customers to continue as distribution customers of their natural gas utility, but they purchase the commodity from Santanna. In many cases, the utility companies offer billing services for the natural gas commodity so customers receive only one invoice, then the utility company remits to Santanna.

“We maintain a low overhead, especially with technological advancements that enable us to do more with fewer people,” said Gatlin. “That has been a tremendous asset in our ability to efficiently manage our customer base, whether it be 24,500 customers or 60,000 customers.”

As Santanna looks to move into retail markets in Ohio and Pennsylvania, these evolutions offer it the opportunity to remain a simple and efficient alternative for its customers. Said Gatlin: “We can offer our customers a competitive price on natural gas and electricity—but we can also offer them quality service.”