Small Margins, Big Risks: How Fraud Hurts Texas Energy Retailers

Fraud has quietly become one of the most existential threats in Texas’s deregulated retail electricity market—because the business runs on razor-thin margins and delayed payment. Under the non-POR system overseen by the Electric Reliability Council of Texas (ERCOT), retail energy providers assume the full risk of nonpayment. With profit margins often measured in just a few percentage points, even modest levels of unpaid electricity can have outsized financial consequences.

So what happens when a market designed to maximize consumer choice also becomes the easiest place to game the system—and when the cost of that gaming ultimately lands back on honest customers? How do you stop fraud without turning enrollment into a painful, customer-hostile obstacle course—and can technology actually tilt the odds back in the retailer’s favor?

Welcome to The CG Hour. In the latest episode, host Fanny Dunagan speaks with guests Pratik Malviya, Executive Vice President of CG Infinity, and Deryl Brown, Executive Chairman of Atlantic Energy, to unpack how fraud works in Texas retail energy, why ERCOT’s structure makes it uniquely vulnerable, and what practical prevention looks like—before and after “electrons start flowing.”

What you’ll learn…

• Texas is a “non-POR” market—so REPs eat the risk. Unlike POR markets (common in parts of the Northeast), where payments can be guaranteed through utility billing structures, Texas retailers must collect directly from customers, making them uniquely exposed to bad debt tied to fraud.
• Fraud scales fast—and can wipe out profitability. Fraudsters can accumulate weeks of unpaid electricity, and even seemingly small losses can have an outsized impact in a low-margin business.
• The best defense is layered: smart onboarding + fast detection. Practical tools include validating emails and phone types (e.g., VoIP risk), soft credit checks, ID verification trends, welcome calls, analytics-driven monitoring, and operational alignment (a single source of truth across sales/ops/billing) to catch fraud earlier and reduce losses.

Pratik Malviya is a retail energy technology leader with more than 15 years of experience designing and delivering software solutions for both residential and C&I energy markets. He has spent over a decade at CG Infinity, progressing to Executive Vice President, where he leads application development, service delivery, and technology strategy for energy retailers. His background spans enterprise architecture, Oracle-based systems, Agile delivery, and utility management platforms, with deep hands-on experience bridging business requirements and scalable technology execution.

Deryl Brown is a veteran energy executive with more than two decades of leadership experience in the U.S. retail energy market. He has served as CEO of multiple competitive energy providers, including Hudson Energy and North American Power, and held senior leadership roles at Direct Energy Business Services during the industry’s expansion. He currently serves as Executive Chairman of the Board at Atlantic Energy, bringing deep expertise in market deregulation, retail operations, and executive strategy.

Article written by MarketScale.