EnronOnline Allies with HoustonStreet, TrueQuote
EnronOnline embarked on a new e-commerce strategy last week that
involves alliances with independent energy trading platforms. Enron
signed memorandums of understanding with HoustonStreet.com and
TrueQuote.com and anticipates signing deals with other platforms in
the near futures. The deals allow Enron to post its prices on the
other platforms and to carry out North American natural gas and
electricity transactions through those other sites.
"Think of this [HoustonStreet and TrueQuote] more as a shop
front," said EnronOnline COO Louise Kitchen. "We are putting our
goods in more and more shops than we were previously, and therefore
we expect that somebody who prefers to transact over HoustonStreet
or maybe another platform like TrueQuote will still be able
transact with Enron through that. It's a customer choice really. We
are trying to give our customers as much choice as possible by
putting our prices across such platforms.
"There will be some more announcements in the future," she said,
referring to negotiations with other trading sites. "We are always
looking at more opportunities. I've got quite a few phone calls
Enron plans to simultaneously post prices at which it will buy
or sell natural gas and electricity on EnronOnline, True Quote.com
and HoustonStreet.com. Customers will be able to transact on any of
EnronOnline handles more than 2,000 mainly gas and power
transactions each day and offers buys and sells on more than 800
products. It has become the world's largest e-commerce site in
terms of commodity value transacted with more than $90 billion in
transactions since the beginning of the year.
"It's amazing," said HoustonStreet CEO Frank Getman. "We haven't
even completed the link with Enron yet and today our screens were
full. We think we have a really solid, best-in-class platform with
functionality that you just don't find in other places. When we get
the Enron numbers, I think we'll be in real good shape. To date
we've done just under $400 million in transactions since the end of
May when we went live with our crude oil, refined products and new
power platforms. The majority of that has been on the crude and
refined products side. We have over 600 traders registered from
about 150 companies. I think we calculated that we have 85% of the
folks who potentially could use our system signed up and online."
Portsmouth, NH-based Houston Street Exchange launched
HoustonStreet.com with an initial power trading platform last fall,
and then expanded with a separate bulk power, crude oil and refined
products this spring. HoustonStreet also developed commodity and
trading alliances with Conoco, Equiva (the U.S. trading arm for
Shell, Texaco and Saudi Aramco), Sithe Energies, Inc., Williams and
Vivendi. It is planning to launch natural gas trading platform in
September, at which time the direct EnronOnline connection will be
"For months now we have been hearing liquidity, liquidity,
liquidity; it's all about liquidity," said Getman. "I think what
this deal is saying is maybe it's something more.
"It's flipping market convention on its head a little bit in
that I think in the end what this is saying is that a number of
these exchanges are going to be interconnected and many of the
exchanges will have the same numbers. It causes you to say maybe
liquidity becomes the commodity not the differentiating factor
between the exchanges. If that's the case, then what is it going to
be that differentiates the exchanges? I think it brings you to
functionality, user experience other value added services, things
along those lines, which is where the real value is...
"People have to realize what they are good at. What Enron is
really good at is making markets and providing liquidity. What
we're really good at is providing what we think is the best
exchange platform in the market and using an open architecture so
we can provide other value added services, provided not necessarily
by HoustonStreet. It may be by Nymex, or whoever."
Nymex also said last week that it is looking into doing
something similar to what EnronOnline has done with these two
alliances. Nymex plans to provide a live e-commerce feed to other
energy trading platforms, allowing traders using those platforms to
buy and sell futures contracts and possibly other products such as
standardized over-the-counter derivatives (see separate story this
Getman said the e-commerce market is rapidly heading down a path
toward standardization and free flow of data between trading
platforms and energy companies.
"It's not holding data and information hostage. It's freely
sharing it with one another. That's where it is going to head...
The reason why you choose one platform over another no longer is
because one has better numbers on it."
TrueQuote is a newcomer to the e-commerce scene. Conceived by
Louisville, KY-based energy broker APB Energy Inc., the platform
will use technology developed by Microsoft Corp. and EnForm
Technology LLC. The system has financial support from PG&E
Corp., APB Inc., Microsoft and EnForm. It will be ready to launch
in the fall, a spokeswoman said.