Spotlight On: Mike Rombach, Vice President & General Manager, NRG Consumer
June 2024 — In an interview with Invest:, Mike Rombach, vice president and general manager of NRG Consumer, talked about the opportunities that exist in the residential and commercial industrial energy segments. He highlighted the need for innovation and collaboration in the energy sector and the challenges that will be brought by a mismatch between an increase in demand and the ability to add generation projects to the grid.
What are the most important trends that are shaping the energy sector in Greater Philadelphia?
There is a big shift going on in the energy market that applies to Philadelphia and other markets. A significant increase in demand nationwide owed largely but not completely to AI technology is forecasted. Energy consumption has remained steady in the U.S. for most of the last century in terms of growth rate, but analysts are starting to expect a step function change.
At the same time, most of the energy market is regulated at the state level. States are better at finding reasons to delay new energy generation than finding reasons to approve it. Because of that, the demand will likely rise more quickly than approved projects will come online and add to energy generation. That puts us in a scenario where we must be more innovative.
As energy companies, we need to show customers innovative ways to use less energy. That is the necessary and responsible way to help manage an increase in consumption. Innovation does not typically come from the utilities based on their subsidy model with the states. Instead, it should come from the competitive market, including NRG Home East. We must deliver innovative technology and smart home energy management measures to help customers save money and reduce use. There is a lot of waste in the system, so we need to figure out ways to achieve improved efficiency.
What are the best areas of opportunity to foster innovation in the energy sector?
The current structure where utilities are subsidized by the states serves market needs but largely does not encourage innovation. We must find ways to innovate, and that is where the competitive market and quasi-governmental organizations like the Philadelphia Energy Authority come into play. There is an opportunity for us to accelerate and innovate more quickly if we collaborate.
What are some of the opportunities that NRG Home East has identified in the commercial and small business sector?
The small business market is growing because it is the backbone of our economic growth as a country and in the Philadelphia region. It is a sector where NRG Home East presently has strong business, and we see it as an area of continued growth and opportunity. Part of serving that market means figuring out what businesses need, and then developing products that meet those needs.
Another identified growth opportunity for NRG is in the multifamily rental segment. We need to develop relationships with landlords and developers and then extend those relationships to the residents. We presently serve the multifamily segment, but we see an opportunity to grow, and to better serve that important market segment.
What is the strategy of NRG Home East to raise awareness of its services in Greater Philadelphia?
We have forged a number of partnerships from our sponsorship of Southeastern Pennsylvania Transit Authority’s (SEPTA) NRG Station located near the stadium complex. That sponsorship is complementary to our affiliations with sports teams including the Philadelphia Eagles. Additionally, NRG has a presence in and with a number of large retail partners. We also collaborate to bring more attention to other high-profile, deserving local organizations including the Children’s Hospital of Philadelphia and Philabundance, among others, because we recognize that doing good in our community is a responsibility that comes along with doing well.
We partner with organizations that share NRG’s values and are important to the communities we serve, and we communicate NRG’s message through those partnerships. Our affiliation with the Children’s Hospital of Philadelphia is around a decade old, and we recently celebrated surpassing the $4 million mark in contributions to that hospital. People in the Greater Philadelphia area often choose to donate one percent of the energy usage on their monthly bill to the hospital. We prime the pump by making an initial contribution and then sustain the donation by contributing that additional one percent from our customers. We partner with the organizations that people care about so that people can do meaningful good that simply by paying their bill.
How will the acquisition of smart home technology company Vivint help NRG’s customers reduce energy consumption?
Through Vivint’s smart home technology products, we will drive innovation by offering smart home controls to our energy customers. These products can, for instance, empower customers to control their energy usage on hot summer days through an easy-to-use app that saves them money. If we can make it easier for people to exert that control, we can empower them to be better stewards of their own energy bill. That is one of the key ways that we will deliver value to our customers in the future.
In situations where there is increasing demand, rates are unlikely to go down. We recognize that we are an important part of customers’ household budgets, so we must be mindful and help them control that part of their budget. We will create an environment where customers can simultaneously save both money and energy.
How are both NRG and the energy sector in general navigating economic and political uncertainty?
Energy suppliers benefit from the fact that, when people control their family budget, they generally adjust other things in their budget before they adjust their energy consumption. Regardless of how many people live in your household, you likely consume electricity in a consistent manner and that makes consumption fairly predictable.
But we should not take that for granted. As people struggle with budgeting and finances, some of their household costs escalate in ways they can’t control. We need to come to them with solutions and flexibility that allow them to fit us into their budget. We need to live more manageably within their family budget and give them tools that afford them control. People have little ability to control food or gas prices, but we can give them more control over their energy usage, and that is something we see as our responsibility.
What are the most important challenges to collaboration between the public and private sector in energy issues?
Demand is growing, so we need to be responsible stewards in helping our markets to meet that demand. Pennsylvania is part of the PJM grid, which includes all or part of 13 states. These states can make individual decisions that appear to be individually beneficial, but which may run counter to the best interests of other states sharing that grid. For instance, states may want more alternative energy and to keep those alternative energy jobs within their state borders. As an industry, we might be able to justify new alternative energy sources that serve those states.
Nevertheless, it is hard to build 13 solutions that make 13 governors happy across the PJM grid. It becomes diseconomies at some point, so the industry needs to collaborate more closely with the regulatory authorities to determine what is in the best interest of the Pennsylvania residents, which may be at odds with what is best for the state house. We need to change the conversation from a Pennsylvania versus Maryland versus Ohio scenario to where we make regional decisions in the best interest of the residents in all 13 states.
What are some of the best opportunities to leverage federal funding to promote alternative energies?
The Philadelphia Energy Authority is a good example of an organization that is finding good local applications for some of the Inflation Reduction Act funds and other federal funding. It provides case studies and examples of better ways to go about improving the energy market. With enough successes under their belt, they can share hard-won learning with Harrisburg to encourage statewide progress.
There is much to be learned from the good application of those funds. Even when those federal funds come to an end, we will have learning that will better inform what the industry should do to invest more broadly. That, plus better dialogue with the regulatory authorities, is very necessary. Unlike Philadelphia, cities that lack an energy authority will have severely limited learning after two to three years, but they can still benefit from Philly’s accumulated experience.
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