With low costs, First Point sees increasing growth

HIGH ENERGY, LOW COST: First Point Power’s team is small, but the company’s emphasis on efficiency allows it to service many customers across a broad swath of the United States from its East Greenwich offices. Above, from left, are: Chief Operating Officer Stephen Bestwick, associate Andrew Litchfield, CEO Peter Schieffelin and associate Andrew Fitzgerald. / PBN PHOTO/MICHAEL SALERNO
HIGH ENERGY, LOW COST: First Point Power’s team is small, but the company’s emphasis on efficiency allows it to service many customers across a broad swath of the United States from its East Greenwich offices. Above, from left, are: Chief Operating Officer Stephen Bestwick, associate Andrew Litchfield, CEO Peter Schieffelin and associate Andrew Fitzgerald. / PBN PHOTO/MICHAEL SALERNO

Many businesses emphasize keeping a lid on overhead costs, but Peter Schieffelin’s First Point Power LLC ups the ante for success when curbing this expense and has the revenue growth to prove it.
The nearly 5-year-old electricity supplier brought in $23.5 million in 2013, more than quintupling its 2011 revenue of $3.8 million, the first full year it was in business. Schieffelin, First Point’s founder and CEO, said the company is at a $40 million run rate for 2014.
Currently, East Greenwich-based First Point, which initially began operations in 2010, employs four people, including Schieffelin. And, helping to restrain overhead costs, the CEO plans to keep the company small, explaining that it has “spent time and focus on setting up systems and technology so we can grow without adding employees.”
It also “spent a lot of time custom-building the system,” such as constructing a “fairly sophisticated sort of structure” for pricing information, Schieffelin said. Among other things, the company offers 12-, 24- and 36-month, fixed-rate contracts, operating in deregulated energy markets in the Northeast and mid-Atlantic states.
Because there aren’t that many power suppliers – only “a couple hundred,” Schieffelin said – software companies do not necessarily devote the time and energy to build the requisite programs.
Andrew Fitzgerald, an associate at First Point since September 2011, agreed that “efficient systems and [a] low [number of] employees” are a “very important aspect” of First Point’s game plan.
Fitzgerald said the company’s culture places an importance on effectiveness. Schieffelin asked him the first week to not use a mouse on his computer when possible so he could be more productive.
Schieffelin himself said the company puts a “focus on being as efficient as we can.”
The company further increased its productivity by discontinuing a network marketing group, through which people looking for a little extra cash could act as sales representatives for the company. Fitzgerald said First Point found “a lot of [the people acting as representatives] needed more coaching” and “that would eat up a lot of our time.” He cited the 80-20 rule: First Point did not want to spend 80 percent of its time on 20 percent of its business.
Now First Point works with a number of third-party brokers and advisers. “Instead of trying to be everything to everyone,” Fitzgerald explained, the company works with third parties “who are established in the industry.”
The low costs help keep prices “competitive,” said founder Schieffelin. First Point started out by offering service to “all types of customers,” but he explained the company does not put much effort into marketing toward residential customers now.
Fitzgerald said the company works with a diverse mix of customers within the commercial realm – everything from municipalities to restaurants and manufacturing centers.
First Point currently operates in Rhode Island, Delaware, Massachusetts, New Hampshire and Pennsylvania. Shortly, it will be starting service in Maine, Schieffelin said, and plans to expand to New Jersey soon. First Point’s expansion strategy is “driven by what our sales channels are telling us,” he said.
This mix of states means the business operates in two power-grid markets: the ISO New England and PJM Interconnection, organizations that coordinate the supply of electricity for their respective regions. Massachusetts, Maine, New Hampshire and Rhode Island belong to ISO NE, which serves the upper Northeast. Delaware, New Jersey, and Pennsylvania are part of PJM, the transmission organization that supplies mainly the lower Northeast and parts of the Midwest.
Schieffelin’s background lent itself to power supply. He previously worked at a New Jersey power-generation company and at Bank of America’s investment-banking group. Practical considerations came into starting the business as well. Schieffelin said it did not “take a huge amount of capital” and “not many businesses are as scalable.”
First Point brought Chief Operating Officer Stephen Bestwick on in January 2013. Before coming to the electricity supplier, Bestwick worked as the president of home-and body-product retailer Crabtree & Evelyn, according to First Point’s website
Fitzgerald said the electricity the company supplies comes from plants that feed into both the New England and PJM markets. Gas made up the bulk of energy generated within the New England market in 2013 at 37 percent, according to the organization’s calculations. In PJM, the market’s data show the source with the largest generation capacity is coal, which accounts for about 43.8 percent.
Renewables make up 7.8 percent of the power generated to customers in the New England transmission area. For PJM, renewables make up only a small portion of the market’s electricity-generation capacity also. For instance, solar power and wind power account for 84 megawatts and 877 megawatts, respectively, out of the 165,000 megawatts generation capacity available throughout that market. Waste power (burning of gas generated by landfills) accounts for 881 megawatts.
Schieffelin said he has “not found much demand” for green energy, adding that while First Point offers it as an option, it’s not a “core product.”
As First Point looks to finish out its year strong and expand, Schieffelin notes that the company has done well because it returned to the basics of business: strong relations with clients.
“In the past couple years, we’ve had success … [by putting] a lot of focus on providing the best service we can to brokers and salespeople,” Schieffelin said.

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