Ameren Energy in the Right Place at the Right Time
Ameren Energy started its electric and gas trading business off
on the right foot this summer, getting into the market just in time
to make a small killing when electric prices spiked in the Midwest
during the last week in June. The company started out with just a
fraction of the personnel it expects to have on board by the end of
"We expected to make $1,000 in July. Instead we made $10,000,"
said Ameren Energy President Shannon Burchett. The company had
opened its brand new 23,000 square foot trading floor in St. Louis
June 3, just three weeks before the infamous June 25 electric
market. "We had the good fortune to be selling into that market. We
were dealt a good hand. We've got highly reliable assets that
operate at low cost." Burchett would reveal only that the company
had sold some power in the "multiple thousands" per MWh, during a
time when some utilities and marketers were paying as much as
$7,000 per MWh.
Ameren Energy is the unregulated trading arm of the newly merged
Ameren Corp., which is now the parent of AmerenUE, the former Union
Electric of St. Louis and AmerenCIPS, formerly known as Central
Illinois Public Service. The merger was completed Jan. 1, 1998
forming the nation's tenth largest utility with generating power of
11,500 MW. Burchett, who had been senior vice president with
Duke/Louis Dreyfus, was made president of the new independent
marketing arm within days of the merger.
With the announcement earlier this month of five new account
managers, Ameren Energy now has a staff of 75, with a target of 100
by the end of this year and 200 by the end of 1999. Burchett said
he currently is interviewing potential employees from LG&E and
CNG, both of which recently dropped out of the marketing business
after experiencing large losses. The company also is investigating
getting into coal trading, he added. The target market is large
customers in states across the country with deregulated electric
"The idea is to optimize our assets," he said, by putting
Ameren's low cost power on the market to maximize revenues. While
they expect to make money in the business, the June 25 spike "was
an aberration. It's something we're not going to see with any
frequency although the likelihood is the volatility of the electric
market is going to remain extremely high. I expect to see 100% to
150% volatility on an annualized basis." That's above the 50% to
70% annualized volatility in the natural gas market, which had been
labeled the most volatile commodities market until electricity made
"We have very aggressive goals. We've invested heavily and we
are expecting high returns."
Ameren Energy's business is about 80% electric and 20% gas.
"We'd like to have revenues from the two about equal," Burchett
said, indicating it would mean some focus on the gas side. "We need
additional alliances." While the company is very strong in the
Midwest, Burchett is looking to pick up strength in other areas. He
said he is looking for merger and acquisition specialist personnel
right now, among others.
©Copyright 1998 Intelligence Press, Inc. All rights
reserved. The preceding news report may not be republished or
redistributed in whole or in part without prior written consent of
Intelligence Press, Inc.