As if there weren’t enough sites to click on already, energybuyers will be getting yet another deal-making space on theInternet. Dynegy and Williams agreed to invest $25 million each fora minority equity stake in eSpeed Inc., an interactive electronicmarketplace engine for business-to-business (B2B) e-commerce.

The eSpeed technology will serve as the platform for at leastfour commodity-specific electronic spot and futures marketplaces inwhich the marketing subsidiaries of Dynegy and Williams willparticipate. Trading could include natural gas, electricity,natural gas liquids, petrochemicals, crude oil and bandwidth.eSpeed anticipates that an electronic marketplace for gas andelectricity will be made available to market participants, such asDynegy and Williams, in the third quarter, with the development ofadditional marketplaces by the end of 2000.

eSpeed operates global electronic marketplaces for low-cost,instantaneous trading of financial instruments and other products.The eSpeed proprietary software is scalable to accommodateadditional trading instruments and commodities.

“The future of commodity trading is in neutral electronicmarketplaces,” said Dynegy CEO Chuck Watson. “After months ofcareful evaluation, we concluded that eSpeed with its provenstate-of-the-art technology, along with its track record ofdeveloping marketplaces in the financial arena, is the idealpartner to develop the energy and bandwidth marketplaces of thefuture. eSpeed technology can be applied and scaled to accommodateother energy commodities. We welcome and expect to attract multipleindustry participants to achieve the liquidity necessary to createa robust, neutral exchange.”

The topic of e-commerce in energy has become a familiar one overthe last several months as new trading sites are announced weekly.Perhaps the most notable announcement, at least one of the firstones, was for EnronOnline. Enron announced its online offering latelast year, saying it eventually would be able to transact deals inany commodity it plays in worldwide. Buyers using EnronOnline canonly buy from Enron. What Dynegy and Williams are proposing is asite open to other sellers as well, similar to the recentlyannounced IntercontinentalExchange.

In a conference call, Williams CEO Keith Bailey said there isroom for both exchanges such as EnronOnline and exchanges open tomultiple sellers. “These are not mutually exclusive markets. Therewill be some markets that are adapting to the structured sorts oftransactions that do have high specialization associated with them.But there will also be, in our judgment, a significant volume thatlends itself to this type of exchange that depends on speed, easeof use, liquidity, neutrality and the low transaction costs thatscale bring. They will both continue to exist, and I think of thetype that lend themselves to the type of system that we’re creatingand the type of marketplace we’re creating, this can and shouldbecome the marketplace of choice. But it will not cause the othertype of business opportunities to go away.”

“This is for the traditional, general transaction and for thecommodities that we choose to include, Watson said. “This does notin any way replace or eliminate the requirement for Dynegy to haveits own portal, to be able to customize those products and servicesfor our customer, just like EnronOnline does for theirs.” Watsonsaid he expects his company, Williams and others to offer their ownportals that offer customers greater customization of deals thanwhat is available on a multiple-seller exchange. Other partnerswill be encouraged to join Dynegy and Williams, Watson said. Theparticipation of other players will be structured to encourageincreased utilization of the system, he added.

“Our system currently handles $150 billion of transactionsdaily,” said eSpeed CEO Howard W. Lutnick. “It is designed so thatvirtually any product can be traded over our global network or theInternet. We are confident that we can quickly create multiple B2Bmarketplaces including energy, bandwidth, petrochemicals, crude oiland natural gas liquids that meet the needs of industryparticipants.”

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