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Nascent Power Marketing Growing in Bounds

Nascent Power Marketing Growing in Bounds

Volume growth in the power marketing business dwarfed that of gas with some marketers posting year-to-year increases of more than 1,000% with gains of more than 100% not unusual. Total sales volumes for the year for the top-20 gas marketers rose 17%, or 17 Bcf/d, whereas for the power marketers volumes soared 103%, or 935.81 million MWh, to 1,841.44 million MWh. Such leaps are not surprising considering power marketing is a less mature business than gas and targets a much larger market.

"I think given the state of the industry you are likely to see some [power] marketers continue with very significant growth rates [and] others are going to retrench because they hoped to serve an area of the market that did not materialize," said Benjamin Schlesinger of Benjamin Schlesinger and Associates. "I think that this is clearly still in what we think of as stage II of any new industry in its growth. The first stage is the realization that this new market exists. The second stage is the onrush of massive numbers of participants, and I think we're still in that. I don't think we're even near the third stage or the shakeout stage in power marketing."

Enron again tops the power marketers, followed by Southern Co., Aquila Energy, Dynegy, and Duke Energy, all of which are top-10 gas marketers. The biggest gainers on the list were Tractebel, 1,460% growth year to year; Avista Energy, 1,150%; Statoil Energy, 358%; Williams Energy, 254%; and El Paso Energy, 244%.

Southern Co. took Dynegy's place at No. 2 while Dynegy dropped to No. 4 behind Aquila Energy, which entered the top five from No. 6 in 1997. No. 4 in 1997, Vitol Gas &amp Electric plummeted to No. 18 in 1998, losing 41% of its power volume. Vitol, which last week was acquired by Avista Energy, was the only power marketer to decline in volume.

Many of the big names in gas show up in power. All but eight of the top 20 power marketers also appear among the top 20 gas marketers. The eight companies appearing in the power ranking but not in gas are Entergy Power, LG&ampE Energy, PacifiCorp Power, Citizens Power, Statoil Energy, Avista Energy, Tractebel, and Conoco Power. These companies either don't have gas marketing operations or didn't sell enough gas to make the ranking.

"The savvy marketers are coming to realize that power marketing and gas marketing go hand in hand," Schlesinger said. Considering three types of marketers - just gas, just power, and gas and power - Schlesinger expects growth particularly in the latter two categories. "I think that there's no question [power marketing is] still an emerging business in many, many respects. The niches are there to be mined by those who are creative enough to find them and get into them."

Joe Fisher, Houston

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