Expanding its fast-growing sphere of influence within theindustry, EnronOnline, the Internet-based wholesale energytransaction platform sponsored by Enron, announced that it willhold the first online sulfur dioxide (SO2) emissions allowanceauction in the U.S. from March 13-16.

During the auction period, users will be able to place onlineorders, free of charge, for the purchase or sale of SO2 allowances.These allowances, which let power generators exceed Clean Air Actemissions standards, without fear of repercussion. Enron will sella minimum of 15,000 allowances during the auction, subject to theonline reservation price. Enron’s auctions for SO2 emissionsallowances will be held on a monthly basis. Enron will not sell anyof the credits, said Shelly Mansfield, an Enron spokesperson. It isjust creating the open forum from which these credits can be boughtand sold she added.

“Using the EnronOnline platform to offer auction capabilitieswill help increase liquidity in the SO2 allowances market,” saidGreg Woulfe, director of emissions trading at Enron North America.”The online auction system is efficient and convenient forcustomers and provides the advantage of a streamlined transactionprocess.”

Although this auction will be the first one EnronOnline willhold in the U.S., the company is not a stranger to the procedure.Enron successfully launched its online auction system in the UKwhen it ran its second annual natural gas storage auction, EnBank,via the EnronOnline website. The first round of online biddingended with the completion of several long-term storage contracts.

Mansfield said this marks the next stage of the rapid growthexperienced by the Internet trading platform. “Its widely used, andgrowing every day,” she said. “Especially the gas side. That isvery liquid.” She did not, however disclose any volumes or amountsof trades except for the fact that more than 25,000 transactionshave been completed via EnronOnline since its inception in November1999.

The platform’s surge coincides with general consolidation in theInternet-based energy trading platform industry. Some people thinkthat EnronOnline’s trading popularity is forcing smaller brokeragefirms into finding larger partners just to survive. For example,earlier this month Houston-based Amerex Natural Gas Inc. and sistercompany Amerex Power Inc. together bought the gas and electricitybrokerage businesses of Houston-based BTU Brokers Ltd. for anundisclosed price (see NGI, March 6). And just last weekLondon-based Tullett & Tokyo Liberty plc., which acquired a 25%stake in Natsource last March, picked up the other 75% of theprivately held company. Tullett & Tokyo, also privately-owned,is one of the leading brokers of wholesale financial productscovering all aspects of the money, securities, derivative andforeign exchange markets.

The consolidation fever even hit the big electronic tradingplatforms. Last year, Altra, one of the industry’s biggest players,purchased three different online brokerage firms, including itschief competitor, Quicktrade (see NGI, July 5).

One gas marketer, who wished to remain anonymous, saidEnronOnline is highly preferable over the other choices.”[EnronOnline] is feeless, the spreads are great, and the peopleoperating the system actually have a stake in the industry. Altradedoesn’t offer that. Altrade is purely a brokerage service. Enron,however, is also a player in the industry. I have an automaticrelationship with them, and that has helped out numerous times.Personally, I think Altrade is in trouble.” Altra did not returnNGI’s phone calls before press time.

Some are not so enthusiastic about participating in a rival’strading system, however. Robert K. Green, UtiliCorp’s president,when questioned at a recent press briefing, said subsidiary AquilaEnergy watches the EnronOnline system, but does not use it becauseof fears this would give information about Aquila’s tradingpositions to a competitor.

John Norris

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