On Real Estate

Tuesday, November 6, 2001

Power players

Deregulation has power companies trying to win the big electricity users

David Pellerin/Caller-Times

Jana Esquivel, Enron team leader, explains a contract and electric rates to Eloy Salazar, managing partner of the Furman Plaza. Deregulation has power companies going door-to-door attempting to win contracts with large electric users.

When Eloy Salazar purchased the Furman Plaza three months ago, he became a popular guy.
   Suddenly, Salazar, who owns other local properties, found himself being wooed by companies wanting to provide electricity to 418 Peoples St.
   "I've gotten three proposals," Salazar said. "It's getting more aggressive."
   As Texas moves nearer to the Jan. 1 start of electricity deregulation, power providers are blitzing Corpus Christi's largest property owners with enticing offers, hoping to win lucrative contracts.
   Climbing rates
   In a market long controlled by Central Power and Light, getting courted by retail providers is a new experience for building owners. Under deregulation, local business owners will get to choose which company to buy electricity from. And choose, they will.
   The past few years, building owners have seen their rates climb.

David Pellerin/Caller-Times

Deregulation of electric companies will begin in Texas Jan. 1, leaving power companies fighting to win new contracts. Business owners say the contracts have been hard to decipher.

   "As a landlord, (electricity) is one of the biggest expenses," Salazar said.
   As retail electric providers compete for his business, Salazar figures he can greatly reduce his $5,000 to $6,000 monthly electric bill at Furman Plaza.
   Currently, CPL is charging Salazar about 10.8 cents a kilowatt hour. Enron Energy Corp. officials are offering to charge him less than 6 cents per kilowatt hour.
   'Building by building'
   "They're contacting people, building by building," Salazar said. "They're actually going door-to-door."
   Houston-based Enron, Dallas-based TXU Energy and AEP-Retail Energy are paying visits to Corpus Christi business owners and property management companies all over town. AEP-Retail Energy is an affiliate of American Electric Power, the parent of CPL. Large commercial and industrial CPL customers automatically will become AEP-Retail Energy customers on Jan. 1 unless they choose another electricity provider. After Jan. 1, CPL's small business and residential users will be served by Mutual Energy, another AEP subsidiary.
   "I would be surprised if there are any high-rise office buildings that haven't been contacted," said Jackie Hale, president of the local branch of the Building Owners and Managers Association. "Because next to refineries, we're the biggest users."
   Attracting consumers
   Hale also is administrative and leasing manager at the Wilson Plaza, a three-building, 297,000-square-foot complex at 606 N. Carancahua. The buildings range in height from eight stories to 17 stories.
   "Suffice it to say, our electric bill runs in the five digits every month," Hale said.
   Electric deregulation has been a hot topic among local building owners and property managers, she said. Power provider representatives have spoken at BOMA meetings, attempting to get their names out to potential consumers.
   BOMA members even have an option of buying electricity as a group, or they can step out on their own, Hale said.
   TXU, Enron and AEP-Retail Energy also are trying to win over Wilson Plaza.
   Confusing contracts
   While the competition is welcome, Hale said there's a lot of information to absorb. The contracts aren't so straightforward, she said.
   "Yes, the offers are attractive, but they're confusing," she said. "Our building is trying to wade through the whole process to make a rational apples-to-apples decision."
   Enron, TXU and AEP wouldn't divulge the rates they're offering or what local companies they've hooked, saying they weren't prepared to show their hand. AEP-Retail Energy may offer incentives in the future, said spokesman David Hagelin.
   "It's a very competitive situation," said John Walls, a TXU spokesman. "We're approaching deregulation and want to be very aggressive and win customers."
   Most of the rates and offers will vary depending on the amount of electricity commercial users consume, they say.
   More than price
   When it comes to electricity, commercial customers are interested in more than price, Walls said. TXU is hawking energy management, energy audits and services to help companies be more energy efficient, he said.
   Jim Sinclair, senior property manager for Williford Property Group, oversees one of Corpus Christi's largest properties - One Shoreline Plaza. The 28-story south tower and the 22-story north tower comprise 365,000 square feet.
   One Shoreline Plaza is considered a prize among power providers.
   Corpus Christi building owners aren't batting away power provider salespeople, he said.
   "I think any prudent owner would at least consider listening to or reviewing information from a provider," Sinclair said. "We're keeping our options open."
  
  

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On Real Estate is published every other Tuesday. Contact Laura Elder at 886-3678 or elderl@caller.com

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