Ameren Energy started its electric and gas trading business offon the right foot this summer, getting into the market just in timeto make a small killing when electric prices spiked in the Midwestduring the last week in June. The company started out with just afraction of the personnel it expects to have on board by the end ofthe year.

“We expected to make $1,000 in July. Instead we made $10,000,”said Ameren Energy President Shannon Burchett. The company hadopened its brand new 23,000 square foot trading floor in St. LouisJune 3, just three weeks before the infamous June 25 electricmarket. “We had the good fortune to be selling into that market. Wewere dealt a good hand. We’ve got highly reliable assets thatoperate at low cost.” Burchett would reveal only that the companyhad sold some power in the “multiple thousands” per MWh, during atime when some utilities and marketers were paying as much as$7,000 per MWh.

Ameren Energy is the unregulated trading arm of the newly mergedAmeren Corp., which is now the parent of AmerenUE, the former UnionElectric of St. Louis and AmerenCIPS, formerly known as CentralIllinois Public Service. The merger was completed Jan. 1, 1998forming the nation’s tenth largest utility with generating power of11,500 MW. Burchett, who had been senior vice president withDuke/Louis Dreyfus, was made president of the new independentmarketing arm within days of the merger.

With the announcement earlier this month of five new accountmanagers, Ameren Energy now has a staff of 75, with a target of 100by the end of this year and 200 by the end of 1999. Burchett saidhe currently is interviewing potential employees from LG&ampE andCNG, both of which recently dropped out of the marketing businessafter experiencing large losses. The company also is investigatinggetting into coal trading, he added. The target market is largecustomers in states across the country with deregulated electricmarkets.

“The idea is to optimize our assets,” he said, by puttingAmeren’s low cost power on the market to maximize revenues. Whilethey expect to make money in the business, the June 25 spike “wasan aberration. It’s something we’re not going to see with anyfrequency although the likelihood is the volatility of the electricmarket is going to remain extremely high. I expect to see 100% to150% volatility on an annualized basis.” That’s above the 50% to70% annualized volatility in the natural gas market, which had beenlabeled the most volatile commodities market until electricity madethe scene.

“We have very aggressive goals. We’ve invested heavily and weare expecting high returns.”

Ameren Energy’s business is about 80% electric and 20% gas.”We’d like to have revenues from the two about equal,” Burchettsaid, indicating it would mean some focus on the gas side. “We needadditional alliances.” While the company is very strong in theMidwest, Burchett is looking to pick up strength in other areas. Hesaid he is looking for merger and acquisition specialist personnelright now, among others.

Ellen Beswick

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