Last week a little town in Oregon adopted a web site as itsofficial name for a one-year trial basis. During the Christmasholidays, Wal-Mart sold a computer with Internet access for about$500, and couldn’t keep up with demand. Some are saying 80%-90% ofthe United States will be Internet-connected by next year.

For Fred Abrew, retired president and CEO of Equitable Resourcesand now chairman of the fledgling Energy E-Comm.Com, these allpoint to one thing —e-commerce over the Internet is here tostay. And he believes the energy companies, many of which still areintimidated by the new technology, better get used to it and fast,or they will be left eating their competitors’ dust. As a whole,the energy industry is lagging behind other businesses in the useof the Internet for e-commerce, he noted, but it is “beginning tounderstand the power of the medium.”

Because the energy sector “is so insular, so isolated within itsown traditional world, it fails to see the potential that existsfor anybody that plays in this [cyberspace],” Abrew said. Instead,the industry “is devoting its efforts to building a moat or aprotective barrier around its traditional service territory and,therefore, may end up seeing its customer base eroded by those whodon’t see the space that way.”

He said this is already happening in a rather dramatic way.”Utilities are losing their customers to third parties who arecoming in via the Internet to take away their very best customers.It’s third-party marketers and it’s third-party demand aggregators.Right now the strategy that seems to be most successful is demandaggregators who are going out and signing up a bunch of customers,and then re-selling that customer list to a supplier.”

Abrew and energy consultant Vinod K. Dar co-founded EnergyE-Comm.com last August as an “information resource that [energy]people can turn to to figure out how they are going to evolve in avery different world.” Right now it has a couple of “majorutilities” as clients, and “well over 100 organizations who haveexpressed in one form or another interest in being associated withus.”

The company’s mission is to assist energy companies indeveloping e-commerce strategies for the new millennium.

Neither he nor Dar are drawing a salary for now. Abrew isworking out of his home in Pittsburgh, PA, while Dar is working outof his home in Cabin John, MD. The company has eight employeesacross the U.S. who are basically working for “sweat equity, butare people who are well connected within the energy world from thepoint of production at the wellhead all the way to the burner-tip,”according to Abrew. The company may soon approach “the venturecapital world to get a large infusion of capital to ramp up muchmore quickly.” Although times are lean now, Abrew expects the newfirm to see revenues of about $1 billion in five years. “That’s howfast this is growing.”

With greater use of the Internet, Abrew sees a “very different”energy sector emerging — one that is much leaner and where manyof the existing methods for attracting customers (advertising,direct mail and telephone solicitations) are out-moded. “Todayprobably the best and most successful start-ups in this area areusing the web site and the Internet where they literally attractcustomers through that medium.

He said the energy industry — natural gas and electricity —has barely scratched the surface of the Internet’s potential. “Mostcompanies today have a web site up, but it’s primarily being usedto say, ‘This is who my company is.’ Most people who might want tointeract with that company can do nothing through their web site.That’s a useless and very dangerous, in our opinion, strategy toundertake because for people who want to do something [interact],it makes them mad that they can’t do it. And so they go to somebodyelse where they can interact.”

Part of the blame for this is the companies themselves, Abrewsaid. But he believes state and federal regulation of the energysector is hampering the use of e-commerce.

The solution, he said, is to get regulators out of the businessof regulating the exchange of information. “It’s one thing toregulate the prices, [but] it’s another thing to begin to regulatehow information is exchanged. The FERC as an example has gottenitself deeply involved in the process of defining what…..issupposed to be available electronically. They started with GISB,then they went to OASIS. Now they’re in the process of coming outwith regulations involving how the regional transmissionorganizations are supposed to be set up electronically.

Maybe e-commerce, Abrew reflects, can begin to change some ofthis. His company has taken the first step by scheduling acollaborative conference on Feb. 1 to address the impact of thee-commerce revolution on regulation and vice versa. Based oncomments received from energy officials at the conference, EnergyE-Comm.Com then plans to petition FERC in late February to initiatean inquiry into the issues.

“We just want to have some rules that make some sense from ane-commerce point of view. There are all kinds of things that needto be debated. There’s the issue of privacy. There’s the issue ofbetter business rules, credit handling and all that, which can beeasily ironed out but you got to do it in a forum that permits thatto happen,” Abrew said.

As for the future, he said his new company is in the process ofdeveloping a very sophisticated search technology for energycompanies. “We’re building a search capability that would help,say, a geologist or a marketer or a product developer structuretheir questions so that they can get an answer that’s relevant towhat they’re looking for.”

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