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Internet trade in electricity taking off -- Green power already scoring from e-trade in energy commodities

Enron Corp, the large Texas-based energy company that owns Enron Wind, is now the world's busiest e-commerce company. Early last month Enron announced that its on-line business -- enrononline -- has handled a staggering $50 billion in transactions since it was formed in November. The $33 billion company is not divulging how many of the 130,000 purchases involve its different products. The web site sells wholesale electricity and products that range from paper to plastics.

The announcement augurs well for the on-line electricity business, which is tipped as a winner for green power. Transactions are cheaper and, for new companies, start-up costs lower than for bricks-and-mortar enterprises. Enron's web site already accounts for 45% of its wholesale revenue and its on-line growth is expected to keep expanding rapidly. Company executives project more than $60 billion in transactions this year. Enron's Internet sales easily dwarf those of far better known e-commerce sites. Amazon.com, the on-line bookseller, had sales of $1.64 billion last year.

Several electricity retailers that exist only on-line already sell green power. Utility.com, an Internet-based marketer, is registered to sell retail power in California, Nevada, Pennsylvania and Massachusetts. Its product, GreenPlanet, certified as a 100% renewables product by the independent Green-e certification body, sells at 20% below the default utility rate in California. Green energy is also offered by Essential.com, which bundles electricity and telecommunications. Among its products is Allenergy's Regen, the only green power product in Massachusetts. Essential.com so far offers phone services nationally and has been waiting for regulatory approval to sell electricity in states with markets opened to competition.

Retailing to homes

Furthermore, on June 8, California's UtilityGuide.com announced an agreement with Go-Green Inc, a seller of green electricity including wind that used to be named "cleen n' green." UtilityGuide.com allows consumers to shop on-line for electricity, telecommunications and on-line services. Users can now sign up directly through its web site for Go-Green, which was awarded a contract several weeks ago by the US Postal Service to deliver electricity to 1100 post offices in California.

Enron announced its on-line results about three weeks after a group of companies led by Enron, IBM, and America Online (AOL) launched The New Power Co (TNPC) as the first truly national supplier of energy and energy-related services to homes and small businesses. The company will probably sell green as well as brown power, says a spokesman.

TNPC will enter the markets in New Jersey and Pennsylvania already this year, eventually expanding to all 24 states that have deregulated so far. It has an agreement to sell energy products exclusively to the millions of customers of AOL -- the largest Internet service provider -- CompuServe, and AOL Digital City for six years. Enron pulled out of the California retail market shortly after it was opened for competition citing slow sales. "We've studied the residential and small business market for several years and believe this is the optimal way to provide value to these customers," says Enron chairman and CEO Kenneth Lay.

A lot of sense

In five to ten years, nearly all of the $240 billion in electricity sales in America will occur on the Internet, according to Roger Gale, of PHB Hagler Bailly, an energy researcher, speaking to Internet Week. Gale cautions, however, that Enron is not experienced as a retailer -- it has mostly so far sold wholesale power.

"If there is ever a place where Internet trading makes a lot of sense, it's with energy commodities," says Bill Swanton, a utilities analyst at AMR Research. The efficiency gains made possible by on-line dynamic pricing and trading are especially suited to the energy industry, he says. A month before Enron's announcement, six of the largest US electricity providers -- American Electric Power, Aquila Energy, Duke Energy, El Paso Energy, Reliant Energy and Southern Company Energy Marketing -- formed an on-line trading consortium. The launch is expected in the third quarter.

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