While acknowledging that industry liquidity has been crimped in recent months as big-league names abandon the energy trading playing field, Entergy Corp. for the most part hasn’t been impacted “in any meaningful way” from the unwinding of trading books, John Wilder, Entergy’s CFO, said last Tuesday while appearing at Edison Electric Institute’s 37th annual financial conference in Palm Desert, CA.
“Certainly, the number of counterparties having problems in the second quarter cost us a little bit of liquidity in the market and a little bit of volume,” said Wilder. “Our third quarter results have been real positive, though. Our gas trading volume’s up about 20%, our power trading volumes are up about the same.”
Wilder sits on the board of Entergy-Koch, a joint venture between subsidiaries of Entergy and Koch Industries Inc. Entergy offers wholesale energy marketing and trading services through Entergy-Koch.
“So we did go through some choppiness in the June, July type timeframe, but we think we’re through that,” he went on to say. “For the most part, we’ve always traded with the banks. We stay on the short end of the curve. Our business has stayed on the short end of the curve for three or four years now and, actually, it comes from a long heritage at Koch Industries where they valued liquidity greatly and didn’t want to have any liquidation problems with their books,” he said.
“So it has been a little bit of an issue as we go through this transition period from some of the big traders who were providing some liquidity in the key markets, but on balance it hasn’t impacted us in any meaningful way,” the Entergy official said.
American Electric Power (AEP) earlier this month said that it was exiting the speculative energy trading business and instead plans to limit future energy trades to geographic sales through its current assets. Allegheny Energy Inc. also said this month that its marketing and trading subsidiary, Allegheny Energy (AE) Supply, will drop speculative energy trading and instead only trade with corporate power plants.
Meanwhile, Wilder detailed some of the opportunities his company is seeing in its optimization business. The business involves helping local distribution companies and investor-owned utilities manage such things as fuel supply, output and risk surround their commodity positions.
“That’s been a business that’s been hard for us to crack for the last five years, as many of these companies have strived to be on top of the leader board in terms of volume,” Wilder acknowledged. “Now, many of those service providers, whether it’s Enron, Dynegy, El Paso, you name them…they’re out of that market now.”
Entergy has secured “a very large energy management agreement on the West Coast and a very large one on the East Coast and we think that’s a business that will be a real nice growth business for us in the future,” Wilder said.
“It’s a fundamental need that the customers have. It’s been provided by a number of competitors who now don’t have the capabilities, from a credit standpoint or trading capacity standpoint, to execute those fuel purchases and outsource management agreements for the customer and it’s one we think we can grow into over the next couple of years.”
Â©Copyright 2002 Intelligence Press Inc. Allrights reserved. The preceding news report may not be republishedor redistributed, in whole or in part, in any form, without priorwritten consent of Intelligence Press, Inc.
© 2023 Natural Gas Intelligence. All rights reserved.
ISSN © 2577-9877 | ISSN © 1532-1266 |