Heavy merger activity is impacting the wholesale energymarketing segment, causing several of the top-20 marketers of 1998to exit the market, and spurring other companies to acquire assetsand start online trading, a new study has found.

In some cases, marketers are striking alliances to increasemarket share or just merely survive. At any rate, scores ofmarketers that have sprung up over the past few years are suddenlyevaluating whether to remain in the volatile marketplace, accordingto Frost & Sullivan’s “North American Wholesale EnergyMarketing Industry.”

Despite the turbulence in the marketing sector, total revenuesin the market have grown from $157 billion in 1998 to $167.9billion in 1999. Revenues are expected to register a double-digitcompounded annual growth rate over the forecast period of 1998 to2005.

“Dramatic increases in merchant power generation are expected toprovide increased volumes in the wholesale market,” Frost &Sullivan said. “Deregulation has allowed the number of merchantplants to multiply in North America. Because these plants generateelectricity solely for sale in the competitive wholesale market,expansion of this field will drive growth in the power marketingindustry.”

The study found online trading sites are improving efficiencyand decreasing the time needed to complete deals.

“The industry has seen a tremendous increase in the use ofcross-commodity deals that leverage the convergence of electricityand natural gas. These types of deals, such as tolling agreements,allow marketers to capture new arbitrage revenues as the prices ofeach commodity fluctuate against one another.”

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