EnronOnline embarked on a new e-commerce strategy last week thatinvolves alliances with independent energy trading platforms. Enronsigned memorandums of understanding with HoustonStreet.com andTrueQuote.com and anticipates signing deals with other platforms inthe near futures. The deals allow Enron to post its prices on theother platforms and to carry out North American natural gas andelectricity transactions through those other sites.

“Think of this [HoustonStreet and TrueQuote] more as a shopfront,” said EnronOnline COO Louise Kitchen. “We are putting ourgoods in more and more shops than we were previously, and thereforewe expect that somebody who prefers to transact over HoustonStreetor maybe another platform like TrueQuote will still be abletransact with Enron through that. It’s a customer choice really. Weare trying to give our customers as much choice as possible byputting 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 alwayslooking at more opportunities. I’ve got quite a few phone callstoday.”

Enron plans to simultaneously post prices at which it will buyor sell natural gas and electricity on EnronOnline, True Quote.comand HoustonStreet.com. Customers will be able to transact on any ofthose systems.

EnronOnline handles more than 2,000 mainly gas and powertransactions each day and offers buys and sells on more than 800products. It has become the world’s largest e-commerce site interms of commodity value transacted with more than $90 billion intransactions since the beginning of the year.

“It’s amazing,” said HoustonStreet CEO Frank Getman. “We haven’teven completed the link with Enron yet and today our screens werefull. We think we have a really solid, best-in-class platform withfunctionality that you just don’t find in other places. When we getthe Enron numbers, I think we’ll be in real good shape. To datewe’ve done just under $400 million in transactions since the end ofMay when we went live with our crude oil, refined products and newpower platforms. The majority of that has been on the crude andrefined products side. We have over 600 traders registered fromabout 150 companies. I think we calculated that we have 85% of thefolks who potentially could use our system signed up and online.”

Portsmouth, NH-based Houston Street Exchange launchedHoustonStreet.com with an initial power trading platform last fall,and then expanded with a separate bulk power, crude oil and refinedproducts this spring. HoustonStreet also developed commodity andtrading alliances with Conoco, Equiva (the U.S. trading arm forShell, Texaco and Saudi Aramco), Sithe Energies, Inc., Williams andVivendi. It is planning to launch natural gas trading platform inSeptember, at which time the direct EnronOnline connection will bemade.

“For months now we have been hearing liquidity, liquidity,liquidity; it’s all about liquidity,” said Getman. “I think whatthis deal is saying is maybe it’s something more.

“It’s flipping market convention on its head a little bit inthat I think in the end what this is saying is that a number ofthese exchanges are going to be interconnected and many of theexchanges will have the same numbers. It causes you to say maybeliquidity becomes the commodity not the differentiating factorbetween the exchanges. If that’s the case, then what is it going tobe that differentiates the exchanges? I think it brings you tofunctionality, user experience other value added services, thingsalong those lines, which is where the real value is…

“People have to realize what they are good at. What Enron isreally good at is making markets and providing liquidity. Whatwe’re really good at is providing what we think is the bestexchange platform in the market and using an open architecture sowe can provide other value added services, provided not necessarilyby HoustonStreet. It may be by Nymex, or whoever.”

Nymex also said last week that it is looking into doingsomething similar to what EnronOnline has done with these twoalliances. Nymex plans to provide a live e-commerce feed to otherenergy trading platforms, allowing traders using those platforms tobuy and sell futures contracts and possibly other products such asstandardized over-the-counter derivatives (see separate story thisissue).

Getman said the e-commerce market is rapidly heading down a pathtoward standardization and free flow of data between tradingplatforms and energy companies.

“It’s not holding data and information hostage. It’s freelysharing it with one another. That’s where it is going to head…The reason why you choose one platform over another no longer isbecause one has better numbers on it.”

TrueQuote is a newcomer to the e-commerce scene. Conceived byLouisville, KY-based energy broker APB Energy Inc., the platformwill use technology developed by Microsoft Corp. and EnFormTechnology LLC. The system has financial support from PG&ECorp., APB Inc., Microsoft and EnForm. It will be ready to launchin the fall, a spokeswoman said.

Rocco Canonica

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