Energy B-to-B Starts Off With 15 Utilities

FRAMINGHAM (04/03/2000) - Fifteen of the nation's largest electric and gas companies have formed a consortium to build an Internet business exchange with suppliers.

The consortium expects to announce the formation of an independent company in June, which will be followed by the creation of the business-to-business online marketplace by year's end, according to statements made by members last week.

The yet-unnamed, for-profit exchange will be open for use by any firm in the energy and utilities industry, but the independent company will initially be owned by the founding utilities, members said.

"It's quite remarkable, really, that 15 companies in the utility space, with competition catching on, could get together and do this in two weeks," said Jennifer Gordon, an information technology spokeswoman for Unicom Corp. in Chicago, one of the 15 members.

"Utilities are not known as being as technologically innovative as a lot of industries, but with automobile and retailing groups creating business-to-business markets on the Web, it's a logical step for utilities to move in this direction," Gordon added.

Another member of the consortium, Public Service Enterprise Group in Newark, New Jersey, anticipates that it will be able to make up to half its annual nonenergy purchases, which total nearly $1 billion, via the online market within the next three years, spokesman Paul Rosengren said.

According to Forrester Research Inc. in Cambridge, Massachusetts, the utility industry is already the third largest in terms of total online business trade.

The consortium expects to generate significant benefits for purchasers and suppliers alike by streamlining purchasing processes, shortening purchase cycles and increasing accessibility between buyers and sellers, the members said.

Initial services will include online proposals, price quotes and auctions for everything from wires to turbines to repair services, Gordon said. Energy itself won't be bought or sold, although several of the utilities are already engaging in such online pursuits separately.

PricewaterhouseCoopers in New York will assist in the development of the exchange and the selection of the technology provider, according to consortium members.

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