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TNPC's New Power Company Readies for Retail

TNPC's New Power Company Readies for Retail

In its quest to become the first nationally branded utility in the United States, TNPC Inc. - an alliance of Enron Corp., America Online and IBM - said that its initial public offering of 24 million common shares at $21 per share would net the company nearly $473 million to intensify its retail marketing efforts and build a customer base. The offering closes Wednesday.

The Greenwich, CT-based company, majority-owned by Enron, in the next few months hopes to launch services in markets where natural gas and electricity are deregulated. Through its retail marketing unit subsidiary, The New Power Company, TNPC will offer direct energy services to residences and small businesses, along with other customer incentives such as frequent flier miles.

Publicly launched in May by its strategic partners, it filed in July with the Securities and Exchange Commission to launch its IPO. TNPC initially had received a capital infusion from its sponsors of more than $120 million, and increased its market stake with a purchase in July of Columbia Energy Group's retail gas and power, mass marketing business. That business now serves 300,000 retail customers in eight states (see NGI, July 3).

The New Power Company began an intense marketing effort in late August to grab customers in deregulated markets in Pennsylvania and New Jersey. The pitch guarantees customer savings of up to 15% for switching from Newark, NJ-based Public Service Electric & Gas Co. And for new customers who switch from PECO Energy Co., based in Philadelphia, the marketer is guaranteeing a savings of up to 25%. There were no figures on the amount of customers who so far have made the switch.

In a private placement transaction in January, Enron contributed its residential and small commercial business to the new venture, and with AOL and IBM, also signed multi-year marketing and service agreements.

Enron owns a 52% stake in TNPC through value-in-kind investments, such as providing energy commodity pricing, risk management and government regulatory affairs. IBM is building the corporate infrastructure and web site and will man the call center. AOL will give TNPC access to its 22 million customers for six years.

TNCP's shares will be listed under the symbol "NPW." Credit Suisse First Boston and Donaldson, Lufkin & Jenrette are co-lead managing underwriters. Chase H&Q, CIBC World Markets, PaineWebber Inc., Salomon Smith Barney and DLJdirect Inc. are co-managers.

Carolyn Davis, Houston

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