The promise of retail energy marketing, but probably not theprofits, seems to be providing enough support to the gas and powermarketing 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 ServiceCompanies.

The total number of marketers in Schlesinger’s annual surveydropped slightly to 541 last year from 567 in 1996. But powermarketers have grown in number and have the potential to doubleover the next few years. The number of power marketers increased to90 from 87, and another 163 power marketers registered at theFederal Energy Regulatory Commission are preparing to enter thefray.

The more mature gas marketing community seems to be undergoingcontinued consolidation, however. The number of active gasmarketers declined by 5% to 288 firms, the Bethesda, MD-basedconsulting 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’sclearly showing signs of maturity although it is amazing there isstill substantial growth in their business in both volumes traded,physical trades and paper trades, and the numbers of marketers isstill way up at nearly 300. There are plenty of niches that peopleare involved in,” said Benjamin Schlesinger, president of theconsulting firm.

The reduction in the number of gas marketers was almost entirelya result of consolidation. “But I laugh when I pick up pressreports of some people predicting there will be only five or eightnational marketers one day and that’s it. Instead we’ve gone from303 to 288. That’s hardly a concentrated industry,” Schlesingernoted.

“Mergers and consolidations are changing the shape of energymarketing in the U.S. and Canada, but nevertheless, the industryremains diverse, competitive and highly unconcentrated,” he said.

He said the survey found the changes taking place in the powermarket are more in the area of sophistication and technicalknow-how that simple growth in numbers of traders, although thatalso is occurring. “The power market is evolving with a combinationof sophisticated use of commercial mechanisms, including gas/powertolling strategies, and an emphasis on reliability to build a soundcustomer base.”

One factor that is playing a role in the growth and developmentof the power market is its unique regional structure, saidSchlesinger. “I think that business is far more regional [than thegas market]. If there’s one thing that’s really clear, it’s thatpower markets have to take place in an environment where there areno ‘pipelines.’ Imagine having to move gas from the Henry Hub toNew York and having to move it LDC by LDC. That may be anoverstatement of the problems they face. There are regional pools,but there’s clearly not the transportation network in place to moveelectrons in the way that we move natural gas.” He said that maystunt growth in the numbers of truly national power marketers.

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

Rocco Canonica

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