With plans drawn up to focus mainly on power transmission anddistribution, New England Electric System (NEES) decided last weekthe time was ripe to start testing the market for its successfulretail energy marketing subsidiary, AllEnergy Marketing.

The company will look at all strategic options, including apossible sale. AllEnergy is one of the largest retail energymarketing firms in the Northeast, currently selling gas, fuel oil,propane, and electricity to about 125,000 customers.

NEES President and CEO Rick Sergel said the move underscoresNEES’s goal to focus on its electricity delivery business. “Sinceits formation in 1996, AllEnergy already has become the largestunregulated retail supplier of natural gas in the Northeast, one ofthe region’s leading home heating oil companies, and an emergingforce in the region’s developing competitive electricitymarketplace,” he said. “We have tremendous respect for the hardwork and dedication of the people responsible for AllEnergy’ssuccess, and believe this is the best way to ensure that successcontinues over the long-term.”

In September 1998, NEES completed the sale of substantially allof its non-nuclear generating business. As a result, its primarybusiness is power transmission and distribution. In December 1998,NEES announced it would merge with The National Grid Group plc,owner and operator of the transmission system in England and Wales,further solidifying its commitment to its electricity deliverybusiness.

“The Federal Energy Regulatory Commission has made it clear thatthe future of electricity transmission lies in RegionalTransmission Organizations governed by companies’ independent ofelectricity marketing firms,” Sergel stated. “Our focus now is oncompleting the merger with National Grid, continuing to work onbeing the best wires company in the Northeast, and growing the sizeof our electricity delivery business. For these reasons,investigating options for AllEnergy makes sound, strategic businesssense.”

Headquartered in Waltham, MA, AllEnergy has sales offices inWorcester, MA; Windsor, CT; Syracuse, NY; and Middlesex, NJ. Itsprincipal heating oil divisions include PAL Energy in Palmyra, NY,and Griffith Consumers Co. in Cheverly, MD, which servesWashington, D.C. and parts of Maryland, Delaware, Virginia, andWest Virginia.

AllEnergy generated revenues of $450 million in 1999. Its assetsare estimated at $200 million. According to NEES’ third quarterfinancial report, its unregulated businesses lost $0.08 per sharein the first nine months of 1999 compared with $0.20 per share forthe same period a year prior and the reduction in losses wasprimarily due to the growth of AllEnergy.

Last summer, AllEnergy bought Texas-Ohio Gas, Inc. from e prime,the energy marketing subsidiary of New Century Energies. Withoperations and 3,000 commercial and industrial gas customers in 12states, Texas-Ohio was among the largest unregulated retail gasproviders in the Northeast. Texas-Ohio’s annual revenue was $60million.

NEES has retained Merrill Lynch as its financial advisor inconnection with the examination of strategic options for AllEnergy.

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