From electronic trading of gas to marketing to thousands ofsmall end users, to expediting the regulatory process, informationtechnology is allowing the energy industry to do things it couldn’thave before.

Oliver G. “Rick” Richard, CEO of Columbia Energy Group, saidsoon “time margin” will become nearly as critical a yardstick asprofit margin for measuring company performance. By time marginRichard means how quickly companies can perform various functionsrelative to the industry. Richard recalled the debate that precededthe unbundling of interstate pipelines. Skeptics said it couldn’tbe done because there was no way to handle the nominations andallocations of multiple shippers.

“But generally we can now see what a great success story thathas been, that the federal government has taken a leadership rolein unbundling pipelines and all the efficiencies. If you take arange of numbers at least put out by one CEO in our business, therehas been at least $100 to $300 billion of costs that were taken outof the system. It’s a tremendous thing that’s happened in the lastfew years, a lot of which now goes to the battle of how can youcomplete those transactions even faster, both at wholesale andretail.”

Richard, who spoke last week in Houston at an INGAA Foundationconference on information technology, said he believes the Internetwill become a principal tool of commerce. Columbia already has 29Web sites set up to market its deregulated products state by stateonce the opportunity becomes available. That’s in addition to thecompany’s corporate Web site and sites for each of its five localdistribution companies. Information technology, particularly theInternet, is key to unbundling, both from a gas supplier and an enduser perspective, Richard said.

“We need to provide a system that’s so easy that consumers canchoose and suppliers can choose without viewing the process as aburden, and information technology can easily make it easy as read,point and click, and that’s what our ultimate goal is.”

The Internet can make it easier for customers weighing offeringsof different gas suppliers to compare information. An exampleRichard gave is an Ohio Public Utility Commission Web site thatgives an apples-to-apples comparison of various gas supplierofferings.

“To make it easier for our suppliers to learn aboutparticipating in our choice programs, our local distributioncompanies in Ohio and Pennsylvania and Maryland have a Web site,and Columbia of Virginia is working on it right now where marketers- not the customer – but marketers can come in and learn more aboutthe choice, sign up to participate as a customer choice programmarketer, and then they can upload and download their customerfiles.”

As evidence of how technology has impacted energy trading,Richard pointed to electronic trading systems QuickTrade andAltra’s Streamline and a recent report that projected more than$4.9 billion worth of physical gas will be traded on the systemsthis year. “Most gas volumes pass through about five hands betweenthe producer and final destination. QuickTrade and Streamline, thetop two electronic trading systems, now account for approximately10% of all the daily deals.”

On the Columbia Gas Transmission system, Richard said automatedoperations of compressor stations have been upgraded to allow forreal-time communication with graphical representation ofinformation.

On the regulatory side, the FERC has embraced informationtechnology development in concert with its FERC First reengineeringprogram. A year ago the Commission hired Kathleen M. Hirning as atechnology consultant. In February she became the FERC’s firstchief information officer. Hirning is now working to bringelectronic filing capability to the FERC. At a conference lastNovember, the Commission heard an industry chorus that said, “Doit. Do it now. Do it as quickly as you can do it,” Hirning said. Toallow FERC’s constituents to eventually make filingselectronically, Hirning is streamlining and centralizing technologyand document handling functions within the FERC.

“What I discovered as far as technology is, although there was acomputer department, each of these [FERC] departments had their ownindividual computer department. And although there weresimilarities between how each department processed their filingsand issues, they were all done separately and differently. Therewere a lot of good ideas about where the Commission should go, whatthe Commission should do, but it was all very fragmented becausethere were different ideas in different locations of theCommission.” Hirning predicted within about a year preparationswill begin for a rulemaking on electronic filing. Joe Fisher,Houston

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