Although still a novice in the electricity market, ColumbiaEnergy Group accomplished something that a number of seasonedveteran traders failed to do when power prices in the Midwest shotup last June – it made a profit, says Chairman Oliver “Rick”Richard. He declined, however, to reveal the amount.

He chalked up this feat to his company’s “conservative” and”thoughtful” approach to electricity trading. “We found [that] bybeing a little conservative and using basic trading structures andtrading rules, we were okay.” Moreover, “we’ve been verythoughtful…about how do you trade in this business,” paying closeattention to the legal, accounting, midstream and backroom aspectsof trading, Richard said at a briefing Wednesday sponsored by theWashington International Energy Group.

“This is the value of not being a first mover [in the tradingbusiness]. Columbia [had] not been a first mover in gas marketing.We started late in the 1990s. We’ve learned a lot from the examplesof other very successful wholesale companies [on] the gas side. Andwe watched the electricity markets beginning to form verycarefully…before we allow[ed] our traders to go out and trade,”he noted, adding that the company entered the electricity marketless than a year ago.

Although a number of power marketers have decided to exit theelectricity market and others are rethinking their futures in thebusiness in the aftermath of the June price fiasco, Columbia Energyplans to stay put. “We will continue to be in that market,” Richardtold reporters.

He believes the June price spikes were and still are a sign ofgrowing pains in the electricity market. Although Columbia survivedintact, “the fact that some people [did] not is an illustration ofa market opening up….” Electric traders are “learning a lot ofwhat the gas industry learned in the last 15 years,” especiallyabout the importance of creditworthy sources with access to thephysical commodity. Richard recalled a time when marketers “werejust in it [the gas market] for what they could get while the PGAwas a lot higher than the market was…They made a little money,and they got out when the squeeze came back down and the marketcleared a little bit more efficiently. So that’ll probably occur inthe electricity business as well.”

Separately, Richard said he opposed efforts, both regulatory andlegislative, that would limit the use of utilities’ corporate orbrand names under restructuring. “We see [this] as a threat bythose who don’t have a brand. The ones that never have built one upor invested in the assets over 100 years all of a sudden want todeny you the ability to use your brand. There are some strongcompetitors out there that don’t need to use that argument ifthey’re as good as they say they are…So I think that’s franklykind of [a] bogus argument.”

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