As some of the big name energy merchants continue to divest themselves of energy service operations, smaller companies such as Richmond, VA-based Compass Energy Services Inc. and Framingham, MA-based Ameresco Inc. are filling in the niche by offering end users all-encompassing custom solutions for their energy needs. The trend is evident across the nation as companies like Duke Energy and Dominion Resources move away from some of their energy service business to focus more on their core competencies.

Last week, Duke Energy reported that it had closed the sale of its DukeSolutions business to Ameresco, a privately held energy services company, in an effort to focus on its core businesses. Duke also closed on its sale of its Duke Engineering & Services (DE&S) business unit to France-based Framatome ANP Inc.

“These sales have allowed Duke Energy to further align the company’s businesses, portfolio and resources to focus on growing wholesale energy markets,” said Bruce Williamson, CEO of Duke Energy Global Markets. “The closings finalize Duke Energy’s effort to place these business units with companies where the business missions are aligned. We are pleased that both units will be part of companies clearly focused on developing the engineering services and energy services businesses as core businesses.”

A Dominion Retail spokesman said the company’s recent shift out of some of its commercial and industrial contracts was really a “strategic” move. He added that the number of exited contracts is not high. “We are big in the retail and residential areas,” said Dan Donovan, spokesman for Dominion Retail. “That is what we are concentrating on now. We have nearly one million retail customer accounts,” which reflects gas and electric and products and services all lumped together, he said.

Nevertheless, Dominion and others are shedding some of their full-service business, at the same time that Enron, which had been active in that business, is no longer. Some industrials, which were convinced several years ago to shed their large energy purchasing staffs in favor of outsourcing, now are complaining they’re being abandoned.

Compass Energy, which was born from Dominion employees that left Dominion Retail Inc., stepped in and picked up a portion of Dominion’s exited commercial and industrial energy service contracts. Formed on April 1, Compass said it currently has almost 100 customers between energy service consulting and natural gas supply in Virginia.

In addition Compass currently conducts supply management services for almost 200 locations in 39 states, Washington D.C., Puerto Rico and four Canadian provinces. The company manages electricity, natural gas, coal, oil, propane and steam supply contracts.

Speaking on the current trend in the industry of large corporations shedding all or some of their energy service segments, Compass President Chris Ziegler pointed to the difference in return on investment as reason for the shift. Using Duke as an example, he said the company at one point probably had about the same amount of staff working at DukeSolutions as it did in its wholesale trading operations business, but the trading operation probably produced a much higher return than the energy service business.

“There they saw organizations that were basically the same size, but weren’t producing the same value for the organization,” Ziegler said. “To me, that is the reason why a lot of these big guys are moving away from the commercial and industrial markets. He added that “in the commercial and industrial market you really have to get in there and get your hands dirty in order to succeed. There is more credit risk and a lot of things that these guys see in that market that are not present in the trading market.” He said it’s possible that serving the commercial and industrial customers “just isn’t a fit right now” for large energy producing companies, but that could change.

Ziegler added that Compass can succeed in the commercial and industrial market because it is “not carrying a huge infrastructure” on its backs. “We don’t have the fixed costs that are inherent with being a part of a large organization.” “Being small in size, we have the ability to really custom tailor our organization towards serving the customer. We have focus and experience in that market and are not going to get lost in a huge corporate structure. Like any specialized niche player, it is what we do and what we know.

“We plan on continuing to add clients that value our service on the consulting side,” Ziegler said. He added that Compass does not have any geographic restrictions in its search. “On the commodity sales side, our plans there are to look for niche markets where a marketer of our size can hook-up with a wholesale supplier. Then we can go after the market and supply consumers with added value.”

Compass currently has eight energy consultants who have moved over from Dominion and is picking up additional staff as it grows its business.

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