NGI The Weekly Gas Market Report
A stable of some of the leading energy companies have partnered up to form TradeSpark, an electronic marketplace powered by developer eSpeed Inc., that will offer natural gas, electricity, coal, weather derivatives and emissions credits through the Internet, private enterprise or via voice brokers beginning this week.
Several energy company trading subsidiaries, including TXU Energy Trading, Shell affiliate Coral Energy, Dominion Resources Inc., Koch Energy Trading Inc. and Williams Energy Marketing and Trading Co., along with Cantor Fitzgerald, a voice brokerage, announced the agreement last week. Dynegy Inc. and Entergy Corp. said they would also become partners when the marketplace begins operations later this month.
In the past 12 months, TradeSpark’s new and future partners estimate they have traded approximately 34.5 Bcf/d and 467 MW of electricity. In the second quarter of 2000, the partners and Dynegy and Entergy estimate that together they’ve traded about 20% of all gas and power in North America.
The announcement comes three months after eSpeed, Dynegy and Williams Energy Services, a unit of Williams, agreed to develop electronic marketplaces. As part of that deal, Dynegy and Williams each purchased a $25 million equity stake in eSpeed (see NGI, May 1).
TradeSpark spokesman Harry Fry said that the venture will “revolutionize” energy trading. “The TradeSpark partnership is inclusive and draws on the experience of all participants to bring speed, neutrality, efficiency and technological leadership” to the market.
eSpeed, headquartered in New York City, uses a network distribution system to provide market information and instant trade execution. Its systems currently trade $150 billion a day in transactions, using about 12% of the system’s capacity. It now sells U.S. Treasury securities, municipals and other debt products through a propriety electronic trading platform.
“If it can be traded, it can be traded on eSpeed,” said Howard Lutnick, eSpeed’s CEO. “If there isn’t a market for it, then we’ll develop the marketplace for it. The possibilities are endless.” He said that TradeSpark would launch eSpeed’s technology “into massive, non-financial marketplaces.”
“Joining this exchange accelerates TXU’s commitment to step up its presence in the energy trading industry,” said V.J. Horgan, president of TXU Energy Trading. “It’s critical for key industry players to accelerate an electronic exchange because efficiency is vital to expanding the market.”
Bill Hobbs, president of Williams Energy Marketing and Trading, said that his company’s role in TradeSpark “confirms Williams’ commitment to maximize the efficiency that e-business represents to the energy industry.”
Carolyn Davis, Houston
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