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CHOICE! Energy of Houston, Texas

Source: Houston Business Journal

Choice Energy is taking advantage of the turmoil in the energy industry to capture quality workers to help clients steer through the deregulation maze

By Allison Wollam
HOUSTON

Javier Loya (Choice Energy) had his sights set on law school while attending Columbia University, but changed his plans after an internship with a fast-paced energy brokerage firm.

“I was immediately attracted to the business,” says Loya, who is now president of natural gas brokerage Choice Energy in Houston. “It’s very energetic, fast-paced – and the money isn’t bad either.”

During his internship at Connecticut-based United Crude Oil, the Gulf War broke out. Loya’s responsibilities quickly grew from assisting brokers to being thrown into the trenches and becoming a broker himself.

Loya went to work for United Crude Oil full-time after graduating from Columbia University in 1991, but after the natural gas industry was deregulated in 1993, Loya saw an opportunity to start his own business.

It’s not surprising that Loya got the entrepreneurial itch, considering his six siblings are also involved in entrepreneurial stints of their own. Loya’s brother, Mike, is president of Houston-based Vitol, one of the world’s largest independently owned crude oil trading companies. His sister, Irma, is CEO of an engineering and consulting firm in Alabama.

Loya and two partners founded Choice Energy in 1994, crafting one of the first institutional natural gas brokerage houses following industry-wide deregulation.

He made headlines earlier this year when he signed on as minority owner for the Houston Texans and was awarded “Entrepreneur of the Year honors by the Houston Hispanic Chamber of Commerce.

Loya helped grow Choice Energy to 11 people in 200. Today, the company employs a staff of 65.

Even though the company has grown exponentially, Loya remains an active trader and stays glued to his computer screen and phones until the market closes each day.

Choice Energy brought in $8 million in revenue in 2001, and Loya expects the company to double that to $16 million this year.

Eight-year-old Choice Energy arranges commodities futures and other kinds of transactions for oil and gas companies and major banks. The company’s client list includes BP, El Paso Energy and Morgan Stanley Dean Witter.

Although the local energy industry is struggling right now, Loya says his company had benefited since many of the large companies began laying off experienced employees earlier this year.

“A lot of the bigger companies have displaced a lot of quality energy traders and marketers,” he says. “We now have people on our staff from Enron, El Paso, Reliant and traders from Wall Street banks,”

Loya points out that because many of the large players in the energy industry are shifting their emphasis away from trading, his company’s role has become more important than in the heyday of the industry.

“In one way, we’ve lost customers, but we’ve also picked up market share and have doubled in size the last two years,” Loya says. “As you see more and more companies downsize, the services will be outsourced to companies like ourselves. This situation has made someone like us the expert in being the middleman.”

But Choice Energy wouldn’t necessarily have been able to thrive during the energy downturn unless it continued to be instrumental in bringing new products to the marketplace, Loya says. He points out that institutional players often come to Choice Energy to help them move commodities in the most effective, up-to-date manner.

Loya says it’s a constant challenge to keep his company on the cutting edge in the industry, but he make sit a point to hire innovative employees in an effort to keep the company at the top of its game.

“We foster an entrepreneurial atmosphere, and there’s not a high level of bureaucracy in the company,” says Loya. “That way, if we see something new and different, we can act on it quickly.”

In fact, until recently the company didn’t even use titles to identify members of the staff. Because of Choice Energy's growth, job titles were ultimately assigned to foster better communication among the staff.

ENERGIZING CHANGE

Loya points out the fact that companies now having the opportunity to choose their energy providers has really had an impact on the business.

“We expect Texas to be the model for the rest of the country with deregulation,” he says.

According to the U.S. Department of Energy, Texas is one of the 18 states that have initiated electricity competition.

Loya says his company stands out from competitors because it’s still small enough to give personal service to each customer and is able to shift its focus on emerging energy trends more easily than most big companies. Robert Kennedy, chief financial officer for Gillman Auto Group, says his company signed a contract with Enron Corp. seconds after deregulation came about and went through a difficult process trying to switch back to Reliant Energy after Enron began to crumble.

“We began looking for a better deal, and Choice Energy found one for us, they’ve saved us a lot of money.” Kennedy says.

Gillman Auto Group benefited from one of Choice Energy's newer divisions, Choice Energy Services.

The two-year-old retail division negotiates on behalf of businesses with the goal of lowering their energy bills. Choice Energy Services’ clients include the Home Depot, Spec’s Liquor Stores and the city of Houston.

Loya admits it was a risk to get involved in the retail sector, but says he’s learned that entrepreneurs can’t be afraid to take chances.

After conducting intricate research on the subject, Loya found that the cost of actually becoming an energy provider would be about $2 million, so he decided to switch his focus to using the company’s experts to arrange transactions for retailers.

“We were still able to get in the market and provide services and offer assistance without a vested interest,” he says.

In the future, Loya says he hopes to grow Choice Energy to a full-service energy company. He envisions the company eventually being able to handle all crude oil derivatives.

Today, Choice Energy serves only as a broker for natural gas and ELECTRICITY. Loya expects the company to enter the provider market in the future and to eventually purchase commodities and sell them to commercial and industrial clients.

“I envision ourselves being able to handle the whole barrel,” he says.

Loya says there’s no timeline for Choice Energy’s growth. In fact, the wants to take it slow, making sure the company enters the right markets at the right time.

“Being a small company, we’re not going to do it right away,” Loya says. “We like to find our niche and grow it when we see the opportunity.”