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ICE's Energy Trading is Building a Full Head of Steam

ICE's Energy Trading is Building a Full Head of Steam

Infant online trading system Intercontinental Exchange (ICE) continues to rack up impressive results, posting over 95 Bcf of physical gas trading, along with almost 970 Bcf of financial gas trading and 40 million MWh of power dealing in its first six and a half weeks of commercial operation.

In comparison, 240 Bcf of combined physical and financial gas trades were done and six million MWh were transacted in the first week of trading on the ICE.

"This is extremely rapid growth from our perspective in a very short period of time," said Janine McArdle, president of the sponsoring energy consortium which includes: American Electric Power; Aquila Energy; Duke Energy; El Paso Energy; Reliant Energy; and Southern Company Energy Marketing.

"There are currently right now over 4,000 physical and financial natural gas and power products available for trading on the system," said McArdle.

"One of the critical success factors with any system is its ability to provide all industry participants access to trading in both the short-term and long-term market product. Most recently with the price volatility and weather patterns that we have been experiencing, access to these various markets has been invaluable. We've seen that as evidenced by a rapid growth in both the daily and near term traded markets both for power and for gas."

The exchange has expanded its user-base at a wildfire's pace as well. Starting six weeks ago with only the partner companies making energy transactions, the system has now grown to 90 different participants including marketers, producers, utilities and end users.

McArdle also said that the electronic back office was nearing completion. Not only have the original partner firms started to utilize the electronic link between their systems and the ICE system to gather and process their companies trading activities, but non-partner firms also have begun to show interest in electronically linking their systems to ICE to gather similar information, said McArdle. "From our perspective, we expect to continue to see an increase in the volume of energy traded on the system," she added.

The six energy powerhouses formed the Energy Trading Platform Holding Company (ETPHCo.) in April in an effort to create an independent power and gas trading exchange (see NGI, April 17). Instead of building their own, the company purchased an interest in Atlanta-based Intercontinental Exchange in July (see NGI, July 31). The ICE exchange initially was launched in March with backing from BP Amoco, Royal Dutch Shell Group, Societie Generale Investment Banking, Totalfina Elf Group, Deutsche Bank, Goldman Sachs and Morgan Stanley Dean Witter.

Alex Steis

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