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Schlesinger Directory Shows Differing Trends for Gas, Power Marketers

Schlesinger Directory Shows Differing Trends for Gas, Power Marketers

The promise of retail energy marketing, but probably not the profits, seems to be providing enough support to the gas and power marketing community that few have decided to exit the business, according to the results of Benjamin Schlesinger and Associates' (BSA) 12th edition of its Directory of Energy Marketing Service Companies.

The total number of marketers in Schlesinger's annual survey dropped slightly to 541 last year from 567 in 1996. But power marketers have grown in number and have the potential to double over the next few years. The number of power marketers increased to 90 from 87, and another 163 power marketers registered at the Federal Energy Regulatory Commission are preparing to enter the fray.

The more mature gas marketing community seems to be undergoing continued consolidation, however. The number of active gas marketers declined by 5% to 288 firms, the Bethesda, MD-based consulting firm reported.

"Gas and power marketers are in different states of development. The gas market has been active for 15 years or more and it's clearly showing signs of maturity although it is amazing there is still substantial growth in their business in both volumes traded, physical trades and paper trades, and the numbers of marketers is still way up at nearly 300. There are plenty of niches that people are involved in," said Benjamin Schlesinger, president of the consulting firm.

The reduction in the number of gas marketers was almost entirely a result of consolidation. "But I laugh when I pick up press reports of some people predicting there will be only five or eight national marketers one day and that's it. Instead we've gone from 303 to 288. That's hardly a concentrated industry," Schlesinger noted.

"Mergers and consolidations are changing the shape of energy marketing in the U.S. and Canada, but nevertheless, the industry remains diverse, competitive and highly unconcentrated," he said.

He said the survey found the changes taking place in the power market are more in the area of sophistication and technical know-how that simple growth in numbers of traders, although that also is occurring. "The power market is evolving with a combination of sophisticated use of commercial mechanisms, including gas/power tolling strategies, and an emphasis on reliability to build a sound customer base."

One factor that is playing a role in the growth and development of the power market is its unique regional structure, said Schlesinger. "I think that business is far more regional [than the gas market]. If there's one thing that's really clear, it's that power markets have to take place in an environment where there are no 'pipelines.' Imagine having to move gas from the Henry Hub to New York and having to move it LDC by LDC. That may be an overstatement of the problems they face. There are regional pools, but there's clearly not the transportation network in place to move electrons in the way that we move natural gas." He said that may stunt growth in the numbers of truly national power marketers.

BSA's directory provides comprehensive data on the marketing industry, including a survey of trends, and detailed descriptions and contact information on marketing companies. For copies of the directory call Schlesinger and Associates at (301) 951-7266.

Rocco Canonica

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ISSN © 2577-9877 | ISSN © 1532-1266
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