The emergence of online exchanges in both energy commodities and other products has enabled energy companies to shift to an environment where suppliers can expand their reach and receive a wider comparison selection when they make business decisions. A report by Energy Info Source, “Online Exchanges in the Energy Industry,” examines an evaluation of the challenges and the drivers impacting energy e-commerce.

“Deregulation of the energy industry is contributing to a fundamental shift, taking place in the sector toward an electronic-based model for conducting transactions,” according to the report. “Utilities that were historically vertically integrated, managing the supply, transmission and distribution of energy in addition to other customer service-related functions, are being separated or divested.”

According to the 140-page report, off-line trading is often time consuming and inefficient, whereas online trading speeds up the process, blurring company distinctions such as size and location. As has been seen in the growth of online exchanges in the past two years, “practically anyone anywhere can participate, and sophisticated services traditionally reserved for large, preferred customers are available to smaller and less sophisticated companies.”

The report notes that the “greatest incentive” for participating in online trades may be in the possible reduction of costs. Internet trading allows many functions to be automated and the “reach of the Internet presents opportunity for suppliers to expand into new markets and acquire new customers.”

Online trading is not “characterized by close long-term and established relationships.” In fact, “anonymity is considered by many companies to be a tool to disguise their positions.” Because of the anonymity, the report found that the market has created a “new set of rules and uncertainties.” It noted that companies choosing to use the Internet now have to be aware of credit risk, liquidity, system security and operating reliability.

For more information on the report, visit the web site at www.energyinfosource.com or call (888) 986-2250.

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