CMS Energy, Ameren Corp., KeySpan and UGI Corp. have joinedAllegheny Energy, Allete (formerly Minnesota Power) and PPL Corp.in the formation of Enporion Inc., a global e-procurement exchangefor the energy industry. The companies see the potential for bigsavings in pooling their buying power over the new exchange.
“This is a major step in taking advantage of technologicalcapabilities to unlock superior buying power, which will achievepurchasing savings and bring more value to our shareholders,” saidCMS Chairman William T. McCormick. “All energy utilities will beable to use this global partnership for their benefit.”
The global partnership will focus on building cost-effectiverelationships between buyers and sellers. Both buyers and sellersshould see reduced cycle times, lower inventories, lowertransaction costs and enhanced profitability, the companies said.Suppliers will see easier interfaces, exposure to new markets, and,in the long run, more standardized design they said. Buyers willaccess new suppliers, and will experience significant supply chainprocess improvements and lower overall operating costs.
In addition to the utility partners, Enporion has establishedrelationships with Lehman Brothers as the investment advisor, AkinGump Strauss Hauer & Feld, LLP as legal counsel to the groupand Cap Gemini Ernst & Young as the business advisor andsystems integrator. Enporion is scheduled for commercial operationby the end of this year.
The Enporion partnership is similar to what 21 utilities,including Unicom, Reliant, Southern, Sempra, AEP, ConEdison,Entergy and others, did in June with the formation of PantellosCorp. The Pantellos sponsors hired Commerce One as their primarytechnology partner. Pantellos, with an initial capitalization of$100 million, is scheduled to begin operation early next year.
CMS’s Thomas Burnham, manager of purchasing, said Pantellos isnot open to any more investors. “We thought that Enporion gave usthe best opportunity to both be an investor and get the benefits ofprocess and product savings.
“There are other [energy e-procurement sites] out there. Infact, there are probably 10 or 12 that are focusing on the energyindustry. These two, I would think, are the leaders at this pointin time. They have the most companies involved at this point.” Bothsites will be something like a large utility version of e-Bay thatallows utilities and other energy companies to buy everything frompower turbines to office supplies.
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