Energy Online Trading Levels Playing Field
Online trading opportunities for energy companies will grow exponentially in the future, offering increased price transparency, trading opportunities, volumes of trades and less congestion in the marketplace. To work well, however, the marketplace has to provide an efficient pool of opportunity and neutral platforms, said two online energy trading platform executives yesterday.
Speaking to analysts in Houston at the Dain Rauscher Wessels Energy Conference, True Quote's COO Christopher S. Edmonds and HoustonStreet vice president Kevin Sluder said their companies were committed to open access platforms, which would help online trading become more efficient and more available.
Energy companies' belief in online trading success is evident, they said, pointing to the growing number of companies that have begun operating their own platforms or that have partnered up to offer online trading.
"Online trading is a better way to do business," said Sluder. "It provides a completely level playing field." Voice broker trading, though still admittedly strong and popular, is at a disadvantage, both said, because it doesn't operate in real time, is less efficient and offers a smaller field of participation..
That playing field also is expanding, and both said that their companies and their partners are becoming more web-focused, moving from voice trading to online trading at a rapid pace. By 2004, HoustonStreet, based in Portsmouth, NH, expects to have transactions totaling $920 million, based less on liquidity and more on the actual value of "per megawatt" or "per barrel."
"Our mission is to be how energy companies do business," Sluder said, saying that his company's long-term vision was to make the Internet the "channel of choice" for energy traders.
At True Quote, Edmonds said the definitive agreement announced yesterday with Enron puts its transaction estimates up in the air. In the next "few weeks," he said, True Quote and Enron will go live in natural gas and electricity. "We are building models as we speak," he said. PG&E National Energy Group also said yesterday it would provide an undisclosed equity investment in the company.
Under the EnronOnline deal, True Quote customers will benefit from EnronOnline's liquidity through a seamless electronic connection between the two systems. The connection will allow True Quote customers to thus gain access to the independent market center operated by Enron. Under the agreement, True Quote will receive prices from Enron Online on natural gas, electricity and coal, with the possibility of expanding into other commodities in the future. No True Quote information will be available on Enron Online, the company said.
Edmonds said Houston-based Enron and Louisville, KY-based TrueQuote now are working to put the technology into place for the connection.
"We're betting on the future," said Edmonds. "As the technology continues to evolve, we will evolve to meet our customers' needs."
Sluder said that HoustonStreet also was working on what "truly creative things" the online platforms could do for customers that the customers could not do before. Offering creative choices will grow the customer base.
"Customers have a choice of where they buy books, where they buy clothes. They have no choice on energy," Sluder said. "If we can come up with a brand new web idea to leverage their energy choices, that's what we'd like to do."
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