Competition Among Trading Platforms Heats Up
The battle lines are forming as competition for recognition as the top
online energy trading platform heats up. The Energy Trading Platform Holding
Company (ETPHCo.), comprised of six of the leading power and natural gas
trading companies, has entered into a deal to purchase an interest in Atlanta-based
IntercontinentalExchange, which claims to be the world's largest Internet-based,
over-the-counter (OTC) marketplace for energy and metals.
In addition to purchasing an interest in the Exchange, each of the partners
has committed to a significant level of annual participation to provide
liquidity. American Electric Power, Aquila Energy, Duke Energy, El Paso
Energy, Reliant Energy and Southern Company Energy Marketing make up the
six new partners of the online trading platform. The six energy companies
formed ETPHCo. in April to create an independent power and natural gas
trading exchange (see NGI, April 17).
In 1999, the companies accounted for the trading of approximately 1
billion MWh and 42 Bcf/d in North America. The deal comes just weeks after
EnronOnline, currently the top volume gas and power exchange, formed alliances
with two other energy trading platforms, HoustonStreet.com and TrueQuote.com
(see NGI, July 17).
The original company of Continental Power Exchange, developed the trading
platform software in-house in early-2000. The software called The ICE,
is a scalable trading system which will allow users secure, anonymous,
access with global trading support at all hours through the business week,
the company said.
Continental then approached major commodity trading firms to secure
liquidity. The result was the formation of IntercontinentalExchange, which
included BP, Deutsche Bank, Goldman Sachs, Morgan Stanley Dean Witter,
Royal Dutch/Shell Group, SG Investment Banking and Totalfina Elf. IntercontinentalExchange
joined the flood of start-up online energy trading sites in March as an
oil and precious metal trading platform (see NGI, March
Precious metals will begin trading spot, forwards and options online
in August. Natural gas, oil and power will follow with a start-up time
in the fall. The exchange will be open to the whole commercial market,
with no memberships or fees, just trade charges, the company said.
"The expanded IntercontinentalExchange will enable users of our
system to trade virtually the entire OTC energy complex - oil, power, and
natural gas - across a single platform, and on a global basis," explained
Jeffrey Sprecher, Intercontinental's CEO. "With the quality, breadth
and sheer volumes that our partners bring to the market, we will be able
to offer traders real-time access to liquidity and capture a significant
portion of the vast market for OTC commodities brokerage."