Enron-led Group Buys Columbia's Retail Marketing Operations
Columbia Energy Group announced last Friday it is stripping off another of
its unregulated assets prior to its merger with NiSource Inc., with a definitive
agreement to sell its retail energy mass marketing operations to The New Power
Company, a retail venture recently launched by Enron, with help from IBM and
America Online (see NGI, May 22).
It is the second bite at the apple for Enron, whose Enron North
America unit purchased Columbia's much reduced wholesale trading
operation in January for $38.3 million. In that deal Enron became
the primary wholesale provider to Columbia's retail operations and
the primary buyer of Columbia Natural Resources' Appalachian
production into early 2001. Also included was a package of gas
already in storage and most of the division's contracts for gas,
power, storage, transportation, and asset management.
Under the terms of the new agreement, The New Power Company will
acquire Columbia's retail gas and power, mass marketing business,
and Columbia will maintain a small, minority equity interest in the
business. Columbia's mass marketing operations currently serve
approximately 300,000 retail energy customers in eight states. The
transaction is expected to be completed by late summer or early
The New Power Company was publicly launched May 16 as a national
residential and small business energy provider serving markets
where natural gas and electricity are deregulated. Strategic
partners and investors in the venture include Enron Corp., IBM and
America Online, Inc. Enron is expected to have about a 60% stake in
the company through value-in-kind investments, such as providing
energy commodity pricing, risk management and government regulatory
affairs. IBM is building the corporate infrastructure and website
and will man the call center. AOL will give the New Power Co.
access to its 22 million customers for six years.
The Columbia retail operations will provide the new company with
a base of retail customers. Enron had virtually abandoned its early
retail customer efforts as utilities and state governments
succeeded in slowing the deregulation process, making it uneconomic
for outside marketers in many states. Columbia's main retail
success has been in Ohio where it has a large distribution company,
Columbia Gas of Ohio, which opened up its market.
Oliver G. Richard III, CEO of Columbia Energy Group, said that
although the company is selling the non-regulated retail marketing
operations, reflecting its decision to concentrate on other aspects
of the energy business, Columbia remains focused on providing
customer choice programs for residential and small business
customers in its distribution territories.
Since 1995, Columbia's local natural gas distribution companies
have worked in a collaborative process with regulators and consumer
groups to create customer choice programs. Of Columbia's 2.1
million distribution customers, customer choice programs are
currently available to nearly 1.7 million, with nearly 640,000
customers enrolled. By the fall of 2000, customer choice will be
available to some 1.9 million customers in all five of Columbia's
local distribution states.
Columbia Energy Group is on track for a merger with NiSource Inc., which was
approved by the shareholders of both companies in early June and is expected
to be completed by the end of the year (see NGI, June
In the last two months Columbia has sold its expanding Cove Point LNG facilities
to Williams for $150 million, and put Columbia Propane Corp. and Columbia
Petroleum up for sale (see NGI, May 29).